Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule: (a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it; (b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering; (c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP; (d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses; (e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary; (f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person; (g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party; (h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof; (i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report; (j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more; (k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more; (l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000; (m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings; (n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice; (o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect; (p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof; (q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code; (r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law; (s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and (t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 2 contracts
Samples: Merger Agreement (Meridian Insurance Group Inc), Merger Agreement (Meridian Insurance Group Inc)
Conduct of Business by the Company. The Company covenants and agrees as to itself that between the date of this Agreement and the Company Subsidiaries that, at all times up to and including earlier of the Effective TimeTime and the termination of this Agreement in accordance with Section 8.1, unless except (1) as set forth in Section 5.1 of the Company Disclosure Letter, (2) as specifically permitted or required by this Agreement, (3) as required by Law, (4) any actions reasonably undertaken by the Company or the Company Subsidiary to protect the health and safety of Company and Company Subsidiary employees and to ensure compliance with COVID-19 Measures, or (5) as consented to in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
conditioned), (a) The the Company shall, shall and shall cause each the Company Subsidiary to, to conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999Ordinary Course of Business, and the Company and each Company Subsidiary shall (b) use all their respective reasonable best efforts to preserve intact its and their present business organization organizations, insurance coverage, relationships with Governmental Entities and preserve its regular services tosuppliers with whom it and they have material business relations, and maintain retain the services (subject to the limitations imposed on the Company and the Company Subsidiary in this Agreement) of its relationships withpresent executive officers, policyholdersdirectors and director-level employees, insurersand (c) without limiting the generality of the foregoing, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except except as contemplated specifically permitted or required by this Agreement, as set forth in Section 5.1 of the Company Disclosure Letter, as specifically required by Law, or for COVID-19 Measures, the Company shall not, and shall not permit any the Company Subsidiary to, do any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned):
(i) authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, shares or propose other securities of the Company or the Company Subsidiary), except dividends and distributions paid or made by the Company Subsidiary to the Company, distributions under the Company Equity Plans and distributions resulting from the vesting or exercise of Company Stock Options or Company Warrants or the vesting and settlement of Company RSU Awards or Company PSU Awards;
(ii) split, combine, reduce or reclassify any of its capital stock, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock;
(iii) in each case except as required by applicable Law, the provisions of the Company Benefit Plans as in effect on the date hereof or the provisions of this Agreement: (A) establish, adopt, amend or terminate any Company Benefit Plan (other than consulting agreements terminable on notice of 30 days or less without any termination obligations of the Company, and offer letters that contemplate “at will” employment with severance, change in control or retention benefits consistent with current arrangements with similarly situated employees) or amend the terms of any outstanding Company Equity Awards, (B) grant or provide any severance or termination payments or benefits to any director, officer, employee or other service provider of the Company or the Company Subsidiary, (C) increase the compensation, bonus or pension, welfare, severance or other benefits of or pay any bonus to any director, officer, employee or other individual service provider of the Company or the Company Subsidiary, (D) take any action to accelerate the vesting, payment, or funding of compensation or benefits under any Company Benefit Plan (including any Company Equity Awards), (E) forgive any loans to directors, officers or employees of the Company or the Company Subsidiary, or (F) hire or terminate the employment or services of (other than for cause or due to death or disability) any officer, employee in a position of Vice President or higher or any individual consultant who has a target annual cash compensation greater than $250,000; provided, that nothing contained herein shall prohibit the Company from (x) increasing or otherwise modifying or supplementing salaries, wages, benefits or other compensation with respect to the 2023 calendar year in the Ordinary Course of Business; or (y) hiring an employee or entering into a contract for services to be provided by a consultant to replace an employee or consultant of the Company or the Company Subsidiary whose employment or consulting relationship is terminated for any reason on or after the date hereof, so long as the terms of the salary, target annual bonus opportunity and other benefits offered to such replacement employee or consultant are substantially similar, or not materially different than, those of the employee or consultant of the Company or the Company Subsidiary whose employment or consulting relationship has been terminated;
(iv) make any change in its dividend financial accounting policies, principles, practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it procedures or any Company Subsidiary is seriously considering;
(c) The Company shall not make any of its methods of reporting income, deductions or other material change in items for financial accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by itpurposes, except as required by Applicable LawGAAP, GAAP applicable Law or SAPGovernmental Entity;
(dv) The acquire, including by merger, consolidation or acquisition of stock or assets or any other business combination or by any other manner, any corporation, partnership, other business organization or any business, division or equity interest thereof;
(vi) amend or propose to amend (A) the Company shall notGoverning Documents or (B) any of the equivalent organizational documents of the Company Subsidiary;
(vii) issue, and shall not permit deliver, grant, sell, pledge, dispose of or encumber, or authorize the issuance, delivery, grant, sale, pledge, disposition or encumbrance of, any shares in its capital stock, voting securities or other equity interest in the Company or the Company Subsidiary or any securities convertible into or exchangeable for any such shares, voting securities or equity interest, or any rights, warrants or options to acquire any such shares in its capital stock, voting securities or equity interest or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units or take any action to cause to be exercisable any otherwise unexercisable Company Equity Award under any existing Company Equity Plan (except as otherwise required by the express terms of any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated herebyEquity Award outstanding on the date hereof), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than issuances of shares of Company Common Stock in respect of the ordinary course Company Equity Awards or loans outstanding under the Note Purchase Agreement (in accordance with the terms thereof) or in connection with any exercise of business consistent Company Stock Options or Company Warrants or the vesting or settlement of Company Equity Awards outstanding on the date hereof and in accordance with past practicetheir respective present terms (or as amended in accordance with this Agreement) or granted following the date hereof in accordance with this Agreement;
(viii) directly or indirectly, purchase, redeem or otherwise acquire any shares of capital stock or any rights, warrants or options to acquire any such shares of capital stock of the Company or the Company Subsidiary, except for (iiiA) incur acquisitions of shares of Company Common Stock in satisfaction by holders of Company Equity Awards in order to satisfy obligations to pay the exercise price and/or Tax withholding obligations with respect thereto and (B) the acquisition by the Company of Company Equity Awards in connection with the forfeiture of such Company Equity Awards;
(ix) incur, assume, endorse, guarantee or otherwise become liable for or modify in any indebtedness material respect the terms of any Indebtedness for borrowed money borrowed in or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), except for transactions at the aggregate stated maturity of such Indebtedness and required amortization or mandatory prepayments;
(x) make any loans to any other Person, except for loans among the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days Subsidiary;
(xi) (A) sell, lease, license, transfer, exchange, swap or less otherwise dispose of, or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree subject to any mergerLien (other than Company Permitted Liens), consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion any of its Assets, bulk material properties or assumption reinsurance arrangement assets (including shares of capital stock or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability equity interests of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000), except for expenditures relating to this Agreement and the consummation sales of the transactions contemplated herebyinventory, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course dispositions of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 obsolete or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its termsworthless equipment, in each case, including, but not limited to, in the Ordinary Course of Business or (B) waive or assign any provision claims or rights of any Insurance Contract to permit a cash-out thereofmaterial value;
(ixii) The (A) compromise or settle any claim, litigation, investigation or proceeding, in each case made or pending by or against the Company shall not, and shall not permit any or the Company Subsidiary to(for the avoidance of doubt, including any compromise or settlement with respect to matters in which any of them is a plaintiff), or any of their employees, officers or directors in their capacities as such, other than pursuant the compromise or settlement of claims, litigation, investigations or Proceedings that: (1) are for an amount not to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets whichexceed $10,000, individually or in the aggregate, are (2) do not involve an admission of guilt or impose any injunctive relief or a material to the financial condition of the Company, any Company Subsidiary, or restriction on the Company and the Company Subsidiaries taken as a whole, and, in addition, in Subsidiary and (3) do not provide for the case license of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 any material Intellectual Property Right or (iiB) restructurecommence any material claim, amendlitigation, modify investigation or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any actionproceeding, other than in the exercise Ordinary Course of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or moreBusiness;
(kxiii) Other than in the ordinary course of business consistent with past practicemake, the Company shall not, and shall not permit any Company Subsidiary to, enter into revoke or change any material contract Tax election, change any Tax accounting period or amend or waive method of Tax accounting, file any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary toamended Tax Return, settle or compromise any claim in any action, audit or proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant relating to a contract in effect on material amount of Taxes, agree to an extension or waiver of the date statute of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess limitations with respect to a material amount of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary toTaxes, enter into any new“closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iiinon-U.S. Law) with respect to any material Tax, or surrender any right to claim a material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Lawrefund;
(sxiv) Other than except for $100,000 in capital expenditures incurred in the ordinary course Ordinary Course of business and consistent with past practiceBusiness, neither make any new capital expenditure or expenditures, or commit to do so;
(xv) take any of the Company nor any Company Subsidiary shall declare, actions set aside or pay any dividends or distributions (whether in cash, stock or propertyforth on Section 5.1(xv) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; andDisclosure Letter;
(txvi) Neither without limitation of clause (xv), except in the Company nor Ordinary Course of Business or in connection with any Company Subsidiary shall transaction to the extent specifically permitted by any other subclause of this Section 5.1, (A) enter into any Contract that would, if entered into prior to the date hereof, be a Material Contract, or (B) materially modify, materially amend or terminate any Material Contract or waive, release or assign any material rights or claims under any Material Contract; or
(xvii) agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 2 contracts
Samples: Merger Agreement (Indivior PLC), Merger Agreement (Indivior PLC)
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to during the period from the date of this Agreement and including continuing until the earlier of the termination of this Agreement or the Effective Time, unless Parent shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or and except as set forth on in Section 4.01 of the Company Disclosure Schedule:
(a) The , the Company shall, shall conduct its business and shall cause each Company Subsidiary to, conduct the businesses of its business subsidiaries to be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company Subsidiary shall use all reasonable commercial efforts to preserve substantially intact its present the business organization of the Company and its subsidiaries, to keep available the services of the present officers, employees and consultants of the Company and its subsidiaries and to preserve the present relationships of the Company and its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment subsidiaries with customers, brokers, suppliers and all others having other persons with which the Company or any of its subsidiaries has significant business dealings with it;
(b) Except relations. By way of amplification and not limitation, except as contemplated by this Agreement, neither the Company shall notnor any of its subsidiaries shall, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, and shall except as set forth in Section 4.01 of the Company Disclosure Schedule, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent, which, in the case of clauses (c), (d)(iv), (e), (f), (h) or (i), will not permit be unreasonably withheld or delayed:
(a) amend or otherwise change the Company Charter Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) in the Company, any of its subsidiaries or affiliates (except for the issuance of shares of Company Subsidiary toCommon Stock issuable pursuant to Company Stock Options outstanding on the date hereof;
(c) sell, pledge, dispose of or encumber any assets of the Company or any of its subsidiaries (except for (i) sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $1 million in the aggregate);
(i) declare, set aside, make or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, except that a wholly-owned subsidiary of the Company may declare and pay a dividend to its parent that is not a cross-border dividend, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iii) except (A) as contemplated by this Agreement, (B) as required by the terms of any security as in effect on the date hereof and set forth in Section 4.01(d) of the Company Disclosure Schedule and (C) to the extent necessary to effect withholding to meet minimum tax withholding obligations in connection with the exercise of any Company Stock Option, amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, shares of Company Common Stock, or any option, warrant or right, directly or indirectly, to acquire any such securities, or propose to do any of the foregoing, (iv) settle, pay or discharge any claim, suit or other action brought or threatened against the Company with respect to or arising out of a Stockholder equity interest in the Company, or (v) make any change in its dividend practices cross-border capital contributions to a subsidiary;
(i) acquire (by merger, consolidation, or policies acquisition of stock or in its underwritingassets) any corporation, pricingpartnership, claims, risk retention, investment, reinsurance practices limited liability company or policies in any material respect; and other business organization or division thereof other than those listed on Section 4.01(e) of the Company agrees that it will notify Parent Disclosure Schedule; (ii) incur any indebtedness for borrowed money, except for borrowings and provide Parent with information reborrowings under the Company's or any of its subsidiaries' existing credit facilities listed on Section 4.01(e) of the Company Disclosure Schedule not in reasonable detail regarding excess of $2 million; (iii) issue any material transactions debt securities or assume, guarantee (excluding investment transactions other than guarantees of the Company's subsidiaries entered into in the ordinary course of business) 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 consistent with past practice, practice (but including transactions involving the securitization of Assets not loans or advances to employees of the Company to fund the exercise price of Company Stock Options or otherwise to purchase shares of the Company Common Stock); or (iv) authorize any Company Subsidiary and transactions involving derivative securities)capital expenditures or purchases of fixed assets which are, whether involving a purchase or salein the aggregate, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in 5 million over the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days next 12 month period; or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 4.01(e);
(iiii) increase in any manner the compensation ofor severance payable or to become payable to its directors, officers, employees or consultants, except for increases in salary or wages of employees of the Company or its subsidiaries, including in connection with promotions, in accordance with past practices; or (ii) grant any severance or termination pay (except to make payments required to be made under obligations existing on the date hereof in accordance with the terms of such obligations) to, or enter into or amend any contract relating to the borrowing of money byemployment or severance agreement, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers current or other employees or agents prospective employee of such party the Company or any of its Subsidiaries or any other Person;
(g) Other than subsidiaries, except for new hire employees in the ordinary course of business consistent with past practicewhose annual salary does not exceed $100,000 and whose severance benefits do not exceed one times annual salary; or (iii) establish, the adopt, enter into or amend any collective bargaining agreement, Company shall notEmployee Plan, and shall not permit including, without limitation, any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures plan that provides for the purchase payment of bonuses or lease incentive compensation, trust, fund, policy or arrangement for the benefit of any products current or services former directors, officers, employees or group consultants or any of products their beneficiaries, except, in each case, as may be required by law;
(g) take any action to change accounting policies or services procedures (other than including, without limitation, procedures with respect to Investment Assetsrevenue recognition, payments of accounts payable and collection of accounts receivable) which except as required by a change in one GAAP or a series of related transactions exceed $100,000 or which in the aggregate for interpretations thereof occurring after the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partydate hereof;
(h) Other make any tax election or settle or compromise any United States federal, state, local or non-United States tax liability;
(i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $1 million in the aggregate, other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess practice of $100,000 liabilities reflected or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts reserved against in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth statements contained in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions SEC Documents or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or incurred in the ordinary course of business and consistent with past practice;; or
(oj) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax mattertake, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, agree in writing or otherwiseotherwise to take, to take any of the actions prohibited by the foregoing clauses (adescribed in Sections 4.01(a) through (s)i) above, or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect or prevent the Company from performing or cause the Company not to perform its covenants hereunder.
Appears in 2 contracts
Samples: Merger Agreement (Scott Technologies Inc), Merger Agreement (Scott Technologies Inc)
Conduct of Business by the Company. Pending the Merger. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to between the date of this Agreement and including the Effective Time, unless Parent shall otherwise consent in writing, (which consent shall will not be unreasonably withheld, ) or as otherwise expressly contemplated or permitted by this Agreement, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its commercially reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries and to preserve the current relationships of the Company and the Subsidiaries with customers, suppliers and other Persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation of the foregoing, except as contemplated by this Agreement or as set forth on neither the Company Disclosure Schedulenor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent (which consent will not be unreasonably withheld) and except as contemplated or permitted by this Agreement:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct amend or otherwise change its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itrespective Charter Documents;
(b) Except as contemplated by this Agreementissue, sell, pledge, dispose of, grant, encumber, or authorize the Company shall notissuance, and shall not permit sale, pledge, disposition, grant or encumbrance, of (i) any Company Subsidiary to, make or propose to make shares of capital stock of any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets class of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesSubsidiary, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Lawwarrants, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement convertible securities or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests insuch capital stock, or to receive any payment based on the value ofother ownership interest (including, the capital stock without limitation, any phantom interest), of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Subsidiary (except that the Company may issue shares of Company Common Stock upon the exercise of Company Options outstanding as of the date of this Agreement) or (ii) any material asset of the Company or any Subsidiary;
(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;
(d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, limited liability company or other business organization or any division thereof or any material amount of assets; (ii) incur any indebtedness for borrowed money (other than borrowings pursuant to its current credit facility) 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; (iii) enter into any material contract or agreement; (iv) authorize any single capital expenditure which is in excess of $25,000 or capital expenditures which are, in the aggregate, in excess of $100,000 for the Company and the Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.1(e);
(f) Except increase the compensation payable or to become payable to its officers or employees, except for regularly scheduled increases in a manner consistent with past practices in salaries of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment or severance agreement with any director, officer or other employee of the Company or any Subsidiary (xother than severance or termination or other payments owed to directors, officers or other employees of the Company or any Subsidiary and indicated on Schedule 5.1(f) as set forth in of the Company Disclosure ScheduleSchedule pursuant to, the agreements or arrangements existing as of the date hereof, or, except as required to comply with applicable law and except as otherwise permitted or contemplated by this Agreement), or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee;
(yg) changes any accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable);
(h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; or
(i) pay, discharge or satisfy any claim, 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 in a manner consistent with past practice, of liabilities reflected or (z) as required by the terms of agreements or plans already reserved against in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt Current Balance Sheet or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than subsequently incurred in the ordinary course of business and in a manner consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(hj) Other than in the ordinary course of business consistent hire any employee with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value an annual base salary in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof100,000;
(ik) The Company shall not, and shall not permit commence or settle any Company Subsidiary to, Legal Proceeding other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber those seeking or otherwise grant any interest in or dispose of any of its Assets whichclaiming, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, under $75,000 in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Scheduledamages; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;or
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle agree or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, commit to take any of the actions prohibited by the foregoing described in clauses (a) through (s)k) of this Section 5.1.
Appears in 2 contracts
Samples: Merger Agreement (Box Hill Systems Corp), Merger Agreement (Artecon Inc /De/)
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up prior to and including the Effective Time, unless Parent the Offeror shall otherwise consent agree in writing, which consent shall such agreement not to be unreasonably withheldwithheld or delayed, or as otherwise expressly contemplated or permitted or contemplated by this Agreement or as set forth on Agreement, the Company Disclosure Schedule:
(a) The Company shall, and shall cause each the Company Subsidiary to, :
(a) conduct its business businesses only in the ordinary course and in substantially the same manner as heretofore conducted since December 31in, 1999not take any action except in, and maintain its facilities in, the Company usual, ordinary and each Company Subsidiary shall regular course of business consistent with past practice and use all commercially reasonable efforts to preserve intact its present business organization organization, assets (including intellectual property) and preserve goodwill, maintain its regular services real property interests (including title to, and maintain leasehold interests in respect of, any real property) in good standing, keep available the services of its officers and employees as a group and preserve the current relationships withwith suppliers, policyholdersdistributors, insurersemployees, reinsurersconsultants, agents, sales customers and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings relationships with it;
(b) Except consult with the Offeror with respect to decisions and expenditures, other than Budgeted Capital Expenditures, in respect of the exploration, development and maintenance of all of the properties and assets owned and controlled by the Company or the Company Subsidiary;
(c) except for transactions involving only the Company and the Company Subsidiary, or as otherwise contemplated by in this AgreementAgreement in connection with the Offer, the Company shall not, and shall not permit any cause the Company Subsidiary not to:
(i) issue, make sell, pledge, lease, dispose of, encumber or agree to issue, sell, pledge, lease, dispose of or encumber: (A) any additional shares of, or any options, warrants, calls, conversion privileges or rights of any kind to acquire any shares or other securities of, the Company or the Company Subsidiary (other than the issuance of Company Shares pursuant to the exercise in accordance with their terms of Options or Warrants or other rights to acquire Company Shares outstanding under agreements disclosed in the Disclosure Letter); or (B) except in the ordinary course of business, any assets of the Company or the Company Subsidiary in excess of $50,000 in the aggregate;
(ii) except as set out in the Disclosure Letter, amend or agree to amend any of the terms of any of the Options or the Warrants, or amend, extend, terminate or otherwise alter (or agree to do any of the foregoing in respect of) any other contractual arrangement of the Company or the Company Subsidiary;
(iii) amend or propose to amend the notice of articles, articles, by-laws or other constating documents of the Company or the Company Subsidiary;
(iv) split, combine or reclassify any outstanding Company Shares, or cause the Company Subsidiary to declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect to the shares of a Company Subsidiary;
(v) redeem, purchase or offer to purchase (or permit the Company Subsidiary to redeem, purchase or offer to purchase) any Company Shares or other securities of the Company or any shares or other securities of the Company Subsidiary;
(vi) reorganize, amalgamate or merge the Company or the Company Subsidiary with any other person, company, partnership or other business organization whatsoever or incorporate any subsidiaries other than in connection with a Pre-Acquisition Reorganization;
(vii) reduce the stated capital of the Company or of the Company Subsidiary;
(viii) acquire or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise) any company, partnership or other business organization or division, or incorporate or form any company, partnership or other business organization or make any change in its dividend practices investment either by purchase of shares or policies securities, contributions of capital (other than to a Company Subsidiary), property transfer or purchase of any property or assets of any other person, company, partnership or other business organization which individually or in its underwritingthe aggregate are in excess of $50,000;
(ix) enter into or agree to the terms of any joint venture or similar agreement, pricingarrangement or relationship;
(x) sell, transfer or assign (or permit the Company Subsidiary to sell, transfer or assign) any interest in any of the mineral properties of the Company or the Company Subsidiary;
(xi) incur or commit to incur any indebtedness for borrowed money (except for borrowing of working capital in the ordinary course of business and consistent with past practice under pre-existing contractual arrangements as in effect on the date hereof), capital expenditures other than Budgeted Capital Expenditures, or any other liability, contractual commitment or obligation or issue any debt securities (for greater certainty, regardless of whether such indebtedness, capital expenditure, liability, commitment, obligation or issuance is contemplated in the Company's existing business plan or any preliminary economic assessment but is not set out in the Budgeted Capital Expenditures) involving amounts which, individually or in the aggregate, exceed $25,000;
(xii) endorse or otherwise as an accommodation become responsible for, the obligations of any other person, company, partnership or other business organization, or make any loans or advances;
(xiii) adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of the Company or a Company Subsidiary other than in connection with a Pre-Acquisition Reorganization;
(xiv) take any action or enter into any transaction that would preclude the Offeror from obtaining the tax "bump", determined under paragraph 88(1)(d) of the Tax Act, in respect of the non-depreciable capital property of the Company upon a wind-up, or amalgamation with, the Company;
(xv) pay, discharge or satisfy any claims, risk retentionliabilities or obligations other than the payment, investmentdischarge or satisfaction, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving of liabilities reflected or reserved against in the securitization Company's financial statements or incurred in the ordinary course of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringbusiness consistent with past practice;
(cxvi) The Company shall not make authorize, recommend, propose or agree to any material change in accounting methods release or practices, including without limitation relinquishment of any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, contractual right or other right under any change in depreciation licence or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPpermit;
(dxvii) The Company shall notabandon or fail to diligently pursue any application for any licence, and shall not permit permit, order, authorization, consent, approval or registration; or
(xviii) waive, release, grant or transfer any Company Subsidiary torights of value or modify or change in any respect any existing licence, (i) amend its charter lease, permit, material contract or by-laws (unless contemplated hereby)other material document, (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice;
(d) except (i) with the consent of the Offeror, (ii) for reasonable fees, if any, paid to (A) members of the Special Committee solely in connection with their participation on such committee, or (B) the directors of the Board by way of directors' fees in amounts consistent with the Company's past practice and (iii) incur any indebtedness for money borrowed as set out in the aggregate for Disclosure Letter, the Company shall not, and shall cause the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying ParentSubsidiary not to, enter into or modify any material partnershipemployment, joint venture consulting, retention, severance or profit sharing contractsimilar agreements or arrangements with, other than contracts with insurance agents or grant any bonuses, salary or fee increases, severance, retention or termination pay to, any officers or directors or, in the ordinary course case of business consistent with past practicesemployees or consultants who are not officers or directors, (vi) enter into take any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person action other than in the ordinary ordinary, regular and usual course of business and consistent with past practice, practice (viiinone of which actions shall be unreasonable or unusual) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject grant of any bonuses, salary or fee increases, severance, retention or termination pay or with respect to any increase of benefits payable in effect on the foregoing clausesdate hereof;
(e) The except with the consent of the Offeror, the Company shall not, nor and shall it permit any cause the Company Subsidiary not to, issue pay any fees or sell make any shares of or interests in, or rights of any kind other payment to: (i) the Financial Advisor with respect to acquire any shares of or interests in, or to receive any payment based on its mandate in connection with the value of, the capital stock of or Offer other equity interests in or any securities convertible into shares of any capital stock of or other equity interests than as set in the engagement letter dated April 29, 2013 between the Company or any and the Financial Advisor, which has been provided to the Offeror, and (ii) the Fairness Opinion Provider with respect to its mandate in connection with the Offer other than as provided in the engagement letter dated May 29, 2013 between the Company Subsidiaryand the Fairness Opinion Provider, which has been provided to the Offeror;
(f) Except (x) except as set forth out in the Disclosure Letter, the Company Disclosure Scheduleshall not, and shall cause the Company Subsidiary not to, adopt or amend any bonus, profit sharing, share purchase, incentive, compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any employee;
(yg) the Company shall use best efforts, and shall cause the Company Subsidiary to use commercially reasonable efforts, to cause its current insurance (or re-insurance) policies not to be cancelled or terminated or any of the coverage thereunder to lapse unless, simultaneously with such cancellation, termination or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect;
(h) the Company shall not take any action, or permit the Company Subsidiary to take any action, which would render, or which reasonably may be expected to render, any representation or warranty made by it in this Agreement untrue in any respect at any time prior to the Effective Time if then made, and promptly notify the Offeror first immediately orally and then promptly in writing of the occurrence of any event or condition that has a Material Adverse Effect in respect of the Company in the ordinary course of business consistent with past practiceits or the Company Subsidiary's businesses or in the operation of its or the Company Subsidiary's properties and of any governmental or third party complaints, investigations or hearings (zor communications indicating that the same may be contemplated);
(i) except as required by otherwise specifically described in this Agreement or in the terms of agreements or plans already in effect or Applicable LawDisclosure Letter, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make authorize or propose or enter into or modify any capital expenditures contract, agreement, commitment or expenditures or commitments for expenditures for arrangement to do any of the purchase or lease matters prohibited by the other paragraphs of any products or services or group of products or services this Section 5.1;
(other than with respect to Investment Assetsj) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;shall:
(i) The Company shall notduly and timely file all Tax Returns required to be filed by it on or after the date hereof and all such Tax Returns will be true, complete and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts correct in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or all respects;
(ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto timely pay all Taxes which is material to the financial condition of the Company, any Company Subsidiary, or the Company are due and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportpayable;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, ;
(iiiv) not make a request for a tax Tax ruling or enter into a Tax Ruling closing agreement with any taxing authorities;
(as defined below), settlement v) not settle or compromise with respect any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes;
(vi) except as disclosed in the Disclosure Letter, not file any amended Tax Return, surrender any right to claim a refund of Taxes, or consent to any material Tax matter, extension or (iii) with respect waiver of the limitation period applicable to any material Tax matter, claim or assessment relating to the Company; and
(vii) not change any of its methods of reporting income losses, deductions or deductions accounting for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable taxation year ending December 31, 19992012, except as may be required by Applicable applicable Law;
(sk) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside use its commercially reasonable best efforts to satisfy (or pay any dividends or distributions (whether in cash, stock or propertycause the satisfaction of) in respect of any capital stock the conditions of the Offer set forth in Schedule A to the extent the same is within its control (except for those conditions of the Offer set forth in Schedule A for the Company and/or the Board must take all actions and steps necessary or desirable), and take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable under all applicable Law to support the Offer, including using its commercial reasonable best efforts to:
(i) obtain all necessary consents, approvals and authorizations as are required to be obtained by it under any Company Subsidiary applicable Law;
(ii) cooperate with the Offeror to oppose, lift or redeemrescind any injunction or restraining order or other order or action seeking to stop, purchase or otherwise acquire any of adversely affect the capital stock of Offeror's ability to consummate, the Company or any Company SubsidiaryOffer; and
(tiii) Neither cooperate with the Offeror in connection with the performance by it of its obligations hereunder; and
(l) the Company nor any Company Subsidiary shall agree, make or cooperate as necessary in writing or otherwise, the making of all necessary filings and applications under all applicable Law required in connection with the transactions contemplated herein and take all reasonable action necessary to take any of the actions prohibited by the foregoing clauses (a) through (s)be in compliance with such Laws.
Appears in 2 contracts
Samples: Acquisition Agreement (New Gold Inc. /FI), Acquisition Agreement (New Gold Inc. /FI)
Conduct of Business by the Company. Pending the Merger. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to between the date of this Agreement and including the Effective Time, except as set forth in Section 5.01 of the Company Disclosure Letter or as specifically contemplated by any other provision of this Agreement, unless Parent shall otherwise consent in writing:
(1) the businesses of the Company and the Company Subsidiaries shall be conducted only in, and the Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and
(2) the Company shall use its commercially reasonable efforts to preserve substantially intact the business organization of the Company and the Company Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Company Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers, licensors, licensees, alliance partners and other persons with which consent the Company or any Company Subsidiary has business relations; provided that the inability of the Company to maintain any such relationships following the use of commercially reasonable efforts as a result of the announcement or pendency of the Merger shall not be unreasonably withhelddeemed a breach of this Section 5.01(2). By way of amplification and not limitation, or except as otherwise expressly permitted or contemplated by this Agreement or as set forth on in Section 5.01 of the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this AgreementLetter, the Company shall not, and shall not permit any Company Subsidiary to, make between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to make do, any change in its dividend practices of the following without the prior written consent of Parent (provided, however, that with respect to paragraphs (c), (g), (h), (i), (j) and (n), such consent shall not be unreasonably withheld or policies delayed):
(a) issue, deliver or in its underwritingsell, pricingor authorize or propose the issuance, claimsdelivery or sale of, risk retentionany shares of capital stock of any class or any securities convertible into, investmentor any right, reinsurance practices warrants, calls, subscriptions or policies in options to acquire, any material respect; and such shares or convertible securities, or any other ownership interest other than (i) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options outstanding on the date of this Agreement under the Company agrees that it will notify Parent Stock Option Plans or pursuant to the Company Purchase Plan, (ii) the issuance of shares of Company Common Stock upon the exercise of Warrants outstanding on the date of this Agreement or (iii) the grant of options to purchase up to 500,000 shares of Company Common Stock in the aggregate, with each such grant to any individual optionee, to officers, employees and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions consultants in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating each case at an exercise price equal to the direct or indirect guarantee then fair market value of any obligation a Share, provided that no such options may be issued that will provide for acceleration as a result of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling by this Agreement (as defined below)other than any options issued pursuant to existing agreements that expressly provide for the issuance of options upon such terms) whether or not in connection with any other event, including termination of employment, and provided further that no such options may be granted to senior vice-presidents or (x) modify any contract with respect to the subject of any of the foregoing clausesother executive officers;
(eb) The Company shall not, nor shall it permit any Company Subsidiary to, issue amend or sell any shares change the Certificate of Incorporation or interests in, Bylaws or rights equivalent organizational documents of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (ic) sell, pledge, lease, mortgagelicense, dispose of, grant, encumber or otherwise authorize for any sale, pledge, lease, license, disposition, grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Companyencumbrance, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall notSubsidiary, nor shall it permit including, without limitation, any Company Subsidiary to, other than pursuant to the operation Intellectual Property of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquireSubsidiary, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and in a manner consistent with past practice;
(od) The Company shallauthorize, and shall cause each Company Subsidiary todeclare, maintain uninterrupted its existing insurance coverage of all types in effect set aside, or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling dividend payment or enter into a Tax Ruling (as defined below)other distribution, settlement payable in cash, stock, property or compromise otherwise, with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and;
(te) Neither reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of the capital stock of the Company nor or any Company Subsidiary (other than pursuant to the repurchase of shares of Company Common Stock at cost from employees, officers, directors, consultants or other persons performing services for the Company pursuant to agreements under which the Company has the option to repurchase such shares upon the termination of employment or service);
(f) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in or any assets of any corporation, partnership, other business organization or any division thereof;
(g) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse the obligations of any person, or make any loans or advances, except for (i) indebtedness incurred in the ordinary course of business and consistent with past practice and (ii) other indebtedness with a maturity of not more than one year in a principal amount not, in the case of both (i) and (ii) in the aggregate, in excess of $100,000;
(h) other than contracts or agreements entered into in the ordinary course of business, enter into contracts or agreements requiring the payment, or calling for the receipt of payment, of consideration in excess of $100,000 in the aggregate, or modify, amend or terminate any such existing contract or agreement;
(i) make or authorize any capital expenditures in excess of $100,000 in the aggregate, other than capital expenditures reflected in the Company’s capital expenditure budget for the 2004 fiscal year (which capital expenditures may be made or authorized in amounts of $500,000 or less);
(j) waive any stock repurchase rights or accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under the Company Stock Option Plans or authorize cash payments in exchange for any options granted under any such plans, except as specifically required by the terms of such plans or any agreements in effect as of the date of this Agreement and disclosed in the Company Disclosure Letter;
(k) increase, or agree to increase, the compensation (including base salary, target bonus and other compensation) payable or to become payable to the Company’s officers or employees, except for increases in accordance with past practices, or grant any rights to severance or termination pay to, or enter into any employment, consulting, termination, indemnification or severance agreement with, any director, officer or other employee of the Company or any Company Subsidiary, or hire any individual for a vice-president or other executive officer position, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; provided, however, that the foregoing provisions of this subsection shall agreenot apply to any amendments to employee benefits plans described in section 3(3) of ERISA that may be required by law;
(l) make or change any material Tax or accounting election, change any annual accounting period, adopt or change any material accounting method, file any amended Tax Return involving any material amount of Taxes, enter into any material closing agreement, settle any material Tax claim or assessment relating to the Company or any Company Subsidiary, surrender any right to claim a refund of Taxes in any material amount, consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or any Company Subsidiary, or take any other action or omit to take any action that would have the effect of increasing the Tax liability in any material respect of the Company or any Company Subsidiary or Parent;
(m) take any action, other than as required by GAAP or by the SEC, with respect to accounting principles or procedures, including, without limitation, any revaluation of assets;
(n) initiate or settle any Legal Proceeding;
(o) (i) sell, assign, lease, terminate, abandon, transfer, encumber or otherwise dispose of or grant any security interest in and to any item of the Company Intellectual Property, in whole or in part, other than in the ordinary course of business (ii) grant any license with respect to any Company Intellectual Property, other than the license of Company software in the ordinary course of business, (iii) other than in the ordinary course of business, disclose, or authorize for disclosure, any confidential Company Intellectual Property, unless such Company Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against disclosure thereof; or
(p) agree in writing or otherwise, otherwise to take any of the actions prohibited by the foregoing clauses (adescribed in Section 5.01(a) through (s)o) above.
Appears in 2 contracts
Samples: Merger Agreement (Ariba Inc), Merger Agreement (Ariba Inc)
Conduct of Business by the Company. The Company hereby covenants and agrees as to itself and the Company Subsidiaries that, at all times up to between the date hereof and including the Effective Time, unless Parent shall otherwise consent except (x) as expressly contemplated hereby (including, as set forth in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement Section 6.1 of the Company Disclosure Schedule or as set forth on the Company Disclosure Schedule:
as an exception or qualification to subsections (a) The Company shallthrough (p) of this Section 6.1), and (y) as Parent shall cause each otherwise agree in advance in writing, the business of the Company Subsidiary to, conduct and its business Subsidiaries shall be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company shall not take any action except in, the ordinary course of business and each in a manner consistent with past practice; and the Company Subsidiary and its Subsidiaries shall use all commercially reasonable efforts to (i) preserve intact its present the Company's business organization and preserve its regular services to, and maintain its relationships withrelations with the current officers, policyholdersemployees and consultants of the Company and its Subsidiaries, insurers, reinsurers, agents, sales (ii) maintain in effect all Company Permits and distribution organizations, underwriters, investment Environmental Permits and (iii) maintain its existing relations with customers, brokersdistributors, manufacturers, dealers and suppliers with which the Company and all others having its Subsidiaries have business dealings with it;
(b) Except as contemplated by this Agreementrelations. By way of amplification and not limitation, between the date hereof and the Effective Time, the Company shall will not, and shall not permit any Company Subsidiary of its Subsidiaries to, make directly or propose to make indirectly, do any of the following except in compliance with the exceptions listed above:
(a) amend or otherwise change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent Certificate of Incorporation or the Company By-laws or those (or the equivalent organizational documents) of any of its Subsidiaries;
(b) issue, sell, pledge, hypothecate, dispose of, grant, license, encumber or otherwise transfer, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, (i) any shares of its or its Subsidiaries' capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its Subsidiaries' capital stock or any other ownership interest (including any phantom interest), of the Company or any of its Subsidiaries (except for the issuance of shares issuable pursuant to any Company Options and provide Parent with information in reasonable detail regarding Company Warrants outstanding as of the date hereof), (ii) any material transactions (excluding investment transactions assets except for sales of assets in the ordinary course of business consistent with past practice, but including transactions involving practice and for the securitization Liens granted in connection with its existing banking lines of Assets of the Company or of any Company Subsidiary credits and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringloans;
(c) The Company shall not declare, set aside, make or pay any material change dividend or other distribution, payable in accounting methods cash, stock, property or practicesotherwise, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPthe Company's capital stock;
(d) The Company shall notin the case of the Company, and shall not permit reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any Company Subsidiary to, of its capital stock;
(i) amend its charter or by-laws acquire (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any including by merger, consolidation, demutualization, acquisition, redomestication, sale or acquisition of all stock or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined belowassets), or (x) modify otherwise make any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests investment in, any corporation, partnership, limited liability company, other business organization or rights of any kind to acquire any shares of or interests indivision thereof, or to receive any payment based on the value of, the capital stock material amount of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policyassets, (ii) enter into or materially amend any severance material contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary totransaction, other than pursuant to the operation of separate accounts (x) in the ordinary course of business, consistent with existing strategiesand (y) which would not be reasonably likely to prevent or materially delay the consummation of the Merger, (iiii) sellauthorize any capital expenditures which are, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (iexcess of 125% of the amounts currently budgeted for the fiscal year 2001 or set forth in Section 6.1(e) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditDisclosure Schedule, or (iv) enter into or amend any real property contract, agreement, commitment or mortgage investments except in arrangement which would require the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingsCompany to take any action prohibited by this subsection (e);
(nf) The Company shall notincur any indebtedness for borrowed money, and shall not permit issue any Company Subsidiary todebt securities, enter into any newassume, guarantee or endorse, or materially otherwise as an accommodation become responsible for, the obligations of any Person, agree to amend or terminate otherwise modify in any existingmanner any agreement or instrument pursuant to which the Company has incurred indebtedness, reinsurance contracts or arrangementsmake any loans or advances, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice, except the refinancing of existing indebtedness, borrowings under commercial paper programs in the ordinary course of business or borrowings under existing bank lines of credit in the ordinary course of business;
(og) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage except as required by Law or by the terms of all types any collective bargaining agreement or other agreement currently in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of between the Company or any Subsidiary of the Company and any employee thereof and, except to any Person who is not a corporate officer of the Company, for increases in the ordinary course of business in accordance with past practices, increase the compensation payable or to become payable to its employees, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director or executive officer of it or any of its Subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any rights or benefits under any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, corporate officer or employee, provided that this subsection shall not prevent the Company or any of its Subsidiaries from making severance payments to the extent contractually obligated under contractual arrangements currently existing at the Company or such Subsidiary and previously disclosed to Parent;
(h) change in any respect (except as required by the SEC or changes in GAAP or applicable law which become effective after the date hereof) any accounting policies, practices or procedures;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express Tax election or deemed election settle or compromise any material claim, action, suit, litigation, proceeding, audit or controversy relating to Taxes, (ii) ; or make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect material change to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income income, deductions or deductions accounting for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Lawlaw;
(sj) Other enter into any contract, agreement, lease, license, permit, franchise or other instrument or obligation which, if in existence and known to the Company prior to the date hereof would have resulted in a breach of Section 4.5;
(k) materially modify, amend or terminate any of the agreements material to the Company or its Subsidiaries or waive, release or assign any material rights or claims, except in the ordinary course of business consistent with past practice;
(l) settle or compromise any arbitration, action, suit, investigation or proceeding, other than in the ordinary course of business and consistent with past practice, neither ;
(m) amend or waive any right under any agreement with any Affiliate of the Company nor (other than its Subsidiaries) or with any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock stockholder of the Company or any of its Subsidiaries or any Affiliate of any such stockholder, other than as may be done in the ordinary course of business and that is not material, individually or in the aggregate, to the Company Subsidiary and its Subsidiaries taken as a whole;
(n) take, or redeemagree to commit to take, purchase any action that would make any representation or otherwise acquire warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time;
(o) renew, extend or replace any of the capital stock of Company's Real Property Leases scheduled to expire prior to the Company or any Company SubsidiaryClosing; andor
(tp) Neither the Company nor enter into, or publicly announce an intention to enter into, any Company Subsidiary shall agreecontract, in writing agreement, commitment, plan or otherwisearrangement to, to take do any of the foregoing actions prohibited by the foregoing clauses (a) through (s)set forth in this Section 6.1.
Appears in 2 contracts
Samples: Merger Agreement (Richton International Corp), Merger Agreement (FRS Capital Co LLC)
Conduct of Business by the Company. The Company covenants and agrees Except as to itself and expressly permitted by this Agreement, as set forth in Schedule 5.1 of the Company Subsidiaries that, at all times up to Disclosure Schedule or with the prior written consent of Parent and including the Effective Time, unless Parent shall otherwise consent in writingPurchaser, which consent shall not be unreasonably withheldwithheld or delayed, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on from the Company Disclosure Schedule:
(a) The date hereof to the Effective Time, the Company shall, and shall cause each Company Subsidiary its Subsidiaries to, conduct its business only (i) carry on their respective businesses in the ordinary course consistent with past practice, (ii) use reasonable best efforts to: preserve intact their business organizations, to keep available the services of their current officers and in substantially employees and to preserve the same manner as heretofore conducted since December 31, 1999, and current relationships of the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment Subsidiaries with customers, brokers, suppliers and other persons with which the Company or its Subsidiaries has business relations, and (iii) comply with all others having applicable Laws wherever its business dealings is conducted, including the timely filing of all reports, forms or other documents with it;
(b) Except the SEC required pursuant to the Securities Act or the Exchange Act. Without limiting the generality of the foregoing, during the period from the date hereof to the Effective Time, except as expressly contemplated by this AgreementAgreement or with the prior written consent of Parent and Purchaser, which consent shall not be unreasonably withheld or delayed, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and :
(a) amend the Company agrees that it will notify Parent Certificate of Incorporation or the Company Bylaws;
(b) authorize for issuance, issue, sell, dispose of, pledge or otherwise encumber, deliver, grant any options for, or otherwise agree or commit to issue, sell or deliver any shares of its capital stock or any securities convertible into shares of its capital stock, or any rights, warrants or options to acquire any such shares or convertible securities or any stock appreciation rights, phantom stock plans or stock equivalents, except pursuant to and provide Parent in accordance with information the terms of convertible securities and options of the Company identified on Schedule 3.2(a) of the Company Disclosure Schedule and outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in reasonable detail regarding cash, stock or property or any material transactions combination thereof) in respect of its capital stock or purchase, redeem or otherwise acquire any shares of its own capital stock or of any of its Subsidiaries, except for (excluding investment transactions i) the purchase from time to time by the Company of Company Common Stock in the ordinary course of business consistent with past practice in connection with the cashless exercise of options or the funding of employee incentive plans, profit sharing plans or other benefit plans of the Company consistent in timing and amount with past practice, (ii) the payment by the Company of its regular annual dividend in an amount not to exceed $0.50 per share of Company Common Stock and (iii) dividends and distributions (including liquidating distributions) by a Subsidiary of the Company to the Company;
(d) (i) create, incur, assume, maintain or permit to exist any debt for borrowed money other than (x) under existing lines of credit in the ordinary course of business consistent with past practice, but including transactions involving and (y) intercompany indebtedness between the securitization Company and any of Assets its Subsidiaries or between any of the Company’s Subsidiaries; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except for the Company and its Subsidiaries pursuant to existing credit facilities; or (iii) make any loans, advances or capital contributions to, or investments in, any other Person (other than travel and similar advances to employees of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, );
(iiie) incur increase in any indebtedness for money borrowed in manner the aggregate for the Company and the Company Subsidiaries in excess compensation of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assetsdirectors, bulk officers or assumption reinsurance arrangement employees or enter into, establish, amend, modify or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other similar reorganizationincentive compensation, profit sharing, health or other welfare, stock option or other equity (or equity-based), pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan (including any plan that would constitute a Company Plan), policy, agreement, trust, fund or arrangement with, for or business combinationin respect of, any stockholder, director, officer, other employee, consultant or Affiliate, other than a Superior Acquisition Proposal (i) as permitted herein, (vrequired pursuant to applicable Law or the terms of agreements in effect as of the date of this Agreement as set forth on Schedule 5.1(e) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or Disclosure Schedule (complete and correct copies of any Company Subsidiary which have been delivered to engage Parent by the Company) and (ii) increases in any businesssalaries, to compete with any Person, to do business with any Person or in any location or to employ any Person, wages and benefits of employees (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than officers) made in the ordinary course of business consistent with past practice;
(f) authorize, recommend, propose or announce an intention to authorize, recommend or propose, or enter into any agreement in principle or an agreement with respect to, any plan of liquidation or dissolution, any acquisition of an amount of assets or securities in excess of $250,000, any sale, transfer, lease, license, pledge, mortgage, or other disposition or encumbrance of a material amount of assets or securities or any change in its capitalization, or any release or relinquishment of any material contract rights;
(g) (i) enter into or extend the term or scope of any contract that purports to restrict the Company, or any Subsidiary from engaging in any line of business or in any geographic area, (viiiii) enter into or extend the term or scope of any agreement with a consultant, sales representative, agent or distributor, (iii) amend or modify any of the Engagement Letters, (iv) enter into any contract that is reasonably likely would be breached by, or require the consent of any third party in order to materially and adversely affect the continue in full force following, consummation of any of the transactions contemplated herebyby this Agreement (other than immaterial contracts that would not materially impact the nature of the Company’s business), (ixv) violate release any Person from, or modify or waive any provision of, any confidentiality, nondisclosure or similar agreement related to the Company’s proprietary Intellectual Property, (vi) take any action to render the restrictive provisions of its covenants under Section 203 of the Pooling DGCL or the Rights Agreement inapplicable to any transaction (as defined belowother than the Merger and the other transactions contemplated by this Agreement among the parties hereto) or any Person (other than Parent and Purchaser), (vii) pay, loan or advance (x) modify any contract with respect to other than the subject payment of any compensation, directors’ fees or reimbursement of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) expenses in the ordinary course of business consistent with past practice) any amount to, or sell, transfer or lease any properties or material assets (zreal, personal or mixed, tangible or intangible) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation ofto, or enter into any contract relating to the borrowing agreement with, any of money by, its officers or directors or any “affiliate” or “associate” of any of its officers or directors, officers (viii) merge or consolidate with any other entity in any transaction in a single transaction or series of transactions or form or commence the operations of any business or any corporation, partnership, joint venture, business association or other employees, except pursuant to the terms of agreements business organization or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognizedivision thereof, or involuntarily become subject to(ix) enter into, terminate or amend any labor organization Material Contract, or any other Person as contract that would be a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under Material Contract if such contract were entered into during the by-laws of a party as they exist on period from the date of this AgreementAgreement until the Effective Time, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents than in the ordinary course of such party or any of its Subsidiaries or any other Person;business.
(gh) Other than authorize or commit to make capital expenditures, except in the ordinary course of business consistent with past practice, the Company shall not, practice and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability 1.0 million in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereofaggregate;
(i) The Company shall not, and shall not permit make any Company Subsidiary to, other than pursuant to the operation of separate accounts change in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber accounting methods or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of accounting practices followed by the Company, any Company Subsidiary, except as required by GAAP or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportapplicable Law;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take settle any action, other than suit, claim, investigation or proceeding (legal, administrative or arbitrative) in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount excess of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more250,000;
(k) Other than in make or change any election under the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;Code; or
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant agree to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire do any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and Except for matters set forth in Section 5.01(a) of the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, Disclosure Letter or as otherwise expressly permitted or contemplated by this Agreement, from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
(a) The Effective Time the Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore previously conducted since December 31and, 1999to the extent consistent therewith, and the Company and each Company Subsidiary shall use all commercially reasonable best efforts to preserve intact its present current business organization organization, keep available the services of its current officers and preserve its regular services to, employees and maintain keep its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings with it;
(bthem. In addition, and without limiting the generality of the foregoing, except for matters set forth in Section 5.01(a) Except as contemplated of the Company Disclosure Letter or otherwise expressly permitted by this Agreement, from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, make do any of the following without the prior written consent of Parent:
(i) (A) declare, set aside or propose to pay any dividends on, or make any change other distributions in respect of (in each case, whether in cash, stock or property), any of its dividend practices capital stock, other than (1) dividends and distributions by a direct or policies indirect wholly owned Company Subsidiary to its parent and (2) quarterly cash dividends with respect to the Company Common Stock not in excess of $0.09 per share, with usual declaration, record and payment dates, (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 shares of its underwritingcapital stock, pricingother than (1) any such issuance by a direct or indirect wholly owned Company Subsidiary to its parent and (2) as permitted under Section 5.01(a)(v), claimsor (C) purchase, risk retentionredeem or otherwise acquire any (1) shares of capital stock of the Company or any Company Subsidiary, investment(2) any other securities thereof or any rights, reinsurance practices warrants or policies options to acquire any such shares or other securities, except as permitted by Section 5.02(a)(viii), or (3) any options, warrants, rights, securities, units, commitments, contracts, arrangements or undertakings of any kind that give any person the right to receive any economic benefit and rights accruing to holders of capital stock of the Company or any Company Subsidiary;
(ii) except to the extent permitted under Section 5.01(a)(v), issue, deliver, sell or grant (A) any shares of its capital stock, (B) any Voting Company Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, Voting Company Debt, voting securities or convertible or exchangeable securities, (D) any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock-based performance units or (E) any options, warrants, rights, securities, units, commitments, Contracts, arrangements or undertakings of any kind that give any person the right to receive any economic benefits and rights accruing to holders of capital stock of the Company or any Company Subsidiary, other than the issuance of shares of its capital stock by a wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary and other than the issuance of Company Common Stock (and associated Company Rights)
(1) upon the exercise of Company Stock Options or rights under the ESPP outstanding as of the date of this Agreement and only if and to the extent required by their terms as in effect on the date of this Agreement and (2) with respect to rights outstanding as of the date of this Agreement under restricted stock units, performance stock rights and deferred compensation plans as set forth in Section 3.03 of the Company Disclosure Letter and only if and to the extent required by their terms in effect on the date of this Agreement;
(iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial equity interest in or portion of the assets of, or by any material respect; other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, except for acquisitions permitted by Section 5.01(a)(iv)(B) or 5.01(a)(ix), or (B) any assets that are material, individually or in the aggregate, to the Company and the Company agrees that it will notify Parent Subsidiaries, taken as a whole, except (x) purchases of assets in the ordinary course of business consistent with past practice and provide Parent (y) acquisitions of assets pursuant to capital expenditures in an amount not in excess of $200,000,000 in the aggregate (including expenditures pursuant to Section 5.01(a)(ix)) and taken together with information all such expenditures made since January 1, 2005;
(v) except as required under applicable Law or the terms of any plan or agreement in reasonable detail regarding effect on August 10, 2005, (A) grant to any material transactions Participant any loan or increase in compensation, except for any such increase in compensation (excluding investment transactions other than a base salary increase to a Primary Company Executive) made in the ordinary course of business consistent with past practice, but including transactions involving (B) grant to any Participant any increase in severance, change in control or termination pay or benefits, or pay any bonus to any Participant, except for bonuses paid to Participants in the securitization ordinary course of Assets business consistent with past practice, (C) enter into any employment, change in control, loan, retention, consulting, indemnification, severance, termination or similar agreement with any Participant, except (x) in the ordinary course of business consistent with past practice in connection with new hires to replace departed key employees, (y) in the Company or ordinary course of any Company Subsidiary business consistent with past practice in connection with promotions made in the ordinary course of business consistent with past practice (except, in the case of clauses (x) and transactions involving derivative securities(y), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
control agreements) and (dz) The Company shall not, and shall not permit any Company Subsidiary to, for severance arrangements entered into with Participants (iother than Excluded Participants) amend its charter or by-laws (unless contemplated herebyin the ordinary course of business consistent with past practice after consultation in good faith with Parent), (iiD) incur take any individual Liability action to fund or series in any other way secure the payment of compensation or benefits under any Company Benefit Plan or Company Benefit Agreement, (E) establish, adopt, enter into, terminate or amend any collective bargaining agreement or other labor union Contract, Company Benefit Plan or Company Benefit Agreement, (F) pay or provide to any Participant any benefit not provided for under a Company Benefit Plan or Company Benefit Agreement as in effect on August 10, 2005 other than the payment of compensation and severance in the ordinary course of business consistent with past practice, (G) grant any incentive awards under any Company Benefit Plan (including the grant of Company Stock Options, stock appreciation rights, performance units, performance shares, restricted stock, stock purchase rights or other stock-based or stock-related Liabilities awards or the removal or modification of existing restrictions in excess of $200,000 any Contract, Company Benefit Plan or Company Benefit Agreement on incentive awards made thereunder), other than in the ordinary course of business consistent with past practice, or (iiiH) incur take any indebtedness action to accelerate any material rights or benefits, including vesting and payment, under any collective bargaining agreement, Company Benefit Plan or Company Benefit Agreement (for money borrowed in the aggregate for avoidance of doubt, under no circumstances shall any voluntary contributions to the US Pension Plan not prohibited by Section 5.01(a)(xiii) be deemed prohibited under this Section 5.01(a)(v) or under any other sub-clause of this Section 5.01(a)); provided that under no circumstances shall this Section 5.01 be deemed to prohibit any of the following actions by the Company and its affiliates between the Company Subsidiaries in excess date hereof and the Closing Date (and the parties acknowledge that such actions shall be permitted during such period): (x) administration of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents the Company's annual bonus program in the ordinary course of business consistent with past practicespractice (including determination and payment of 2005 bonuses and establishment and implementation of a plan for the 2006 calendar year), and (y) grants of Company Stock Options and restricted stock units and performance units in amounts and on terms consistent with past practice (it being agreed that aggregate grants of each type of award in an amount that does not exceed the amount of such type that was granted in 2004 shall be conclusively deemed consistent with past practice), and implementation of a long-term incentive program for the 2006-2008 cycle with target amounts and terms consistent with those of the Cash LTIPs, each under the Company Stock Plans; and, provided, further, that between the date hereof and the Closing Date, the Company and its affiliates may negotiate in good faith a settlement with applicable labor unions with respect to grievances concerning the freezing of the ESPP, and provide compensation to the extent determined in good faith to be necessary to facilitate such a settlement;
(vi) enter into make any contract limiting change in accounting methods, principles or practices materially affecting the ability reported consolidated assets, liabilities or results of operations of the Company or of any Company Subsidiary to engage Company, except insofar as may have been required by a change in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, GAAP;
(vii) enter into sell, lease (as lessor), license or otherwise dispose of or subject to any contract relating Lien any material properties or assets, except (x) pursuant to contracts or agreements in effect as of August 10, 2005, (y) sales of assets in the ordinary course of business consistent with past practice or (z) sales of assets or properties in the commercial appliance segment; provided, in the case of clause (z), that such sale, lease, license or other disposition or subjection of Lien (1) is not consummated prior to the direct or indirect guarantee first anniversary of the date hereof, (2) any obligation agreement for such sale is terminable if the Effective Time occurs prior to the first anniversary of the date hereof and (3) includes only the Dixie-Narco and/or Jade brands (solely with respect to suxx xxgment);
(viii) (A) incur any Person in respect of indebtedness for borrowed money or guarantee any such indebtedness of another person (other than any such indebtedness or guarantees among the Company and the direct or indirect wholly owned Company Subsidiaries or among the direct and indirect wholly owned Company Subsidiaries), issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Company Subsidiary, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial obligation statement condition of another person or enter into any arrangement having the economic effect of any Person of the foregoing, provided that the Company may enter into a credit facility so long as the Company does not incur any indebtedness thereunder, except as permitted hereby, except, in the case of this clause (A) for (x) short-term borrowings
(1) incurred in the ordinary course of business consistent with past practice or (2) for working capital purposes, (y) indebtedness incurred to refinance indebtedness existing on the date of this Agreement or (z) indebtedness incurred in connection with capital expenditures permitted by Section 5.01(a)(ix); 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 direct or indirect wholly owned Company Subsidiary;
(ix) make or agree to make any capital expenditures other than those capital expenditures in an amount not in excess of $200,000,000 in the aggregate (including expenditures pursuant to Section 5.01(a)(iv)) and taken together with all such expenditures made since January 1, 2005;
(x) make or change any material Tax election or settle or compromise any material Tax liability or refund, other than in the ordinary course of business consistent with past practice or as required by applicable Law;
(xi) (A) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Filed Company SEC Documents or incurred in the ordinary course of business consistent with past practice, (viiiB) enter into cancel any contract that is reasonably likely to materially and adversely affect material indebtedness (individually or in the consummation of the transactions contemplated hereby, (ixaggregate) violate or waive any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, claims or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the substantial value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (zC) as required by waive the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation benefits of, or enter into agree to modify in any contract relating to the borrowing of money bymanner, its directors, officers any confidentiality or other employees, except pursuant to the terms of agreements or plans as currently similar agreement (excluding any standstill provision in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (ivagreement) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(hxii) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 insurance policy or any other rights which are material to any contract arrangement naming or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken providing for it as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 beneficiary or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required payable payee to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction canceled or $250,000 per issuer terminated (unless such policy or credit, arrangement is canceled or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or terminated in the ordinary course of business and consistent concurrently replaced with past practicea policy or arrangement with substantially similar coverage) or materially impaired;
(oxiii) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is availablemake any contributions to the US Pension Plan, except for insurance coverage (x) contributions of up to $70,000,000 from and after August 10, 2005 through December 31, 2005, (y) contributions of up to $100,000,000 during the failure 2006 calendar year and (z) with the consent of Parent (not to so keep would not have a Company Material Adverse Effectbe unreasonably withheld), additional contributions of up to $100,000,000 during the 2006 calendar year;
(pxiv) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed enter into any material agreement that is not terminable by or on behalf of the Company or any a Company Subsidiary after Subsidiary, without penalty, within one year from the date hereofof entering into any such agreement;
(qxv) The Company shall notrenew, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make extend or rescind amend any material express or deemed election relating agreement if doing so would cause such agreement to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may not be required terminable by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any a Company Subsidiary, without penalty, within one year from the date of entering into any such renewal, extension or amendment; andor
(txvi) Neither the Company nor authorize any Company Subsidiary shall agreeof, in writing or otherwise, commit or agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (Maytag Corp)
Conduct of Business by the Company. The Company covenants and agrees as to itself From the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, and except (i) as expressly permitted or required by this Agreement, (ii) as may be required by applicable Law or pursuant to the terms of any Company Subsidiaries Benefit Plan in effect as of the date hereof, (iii) for any actions taken reasonably and in good faith in response to COVID-19 or COVID-19 Measures (provided that, at all times up in the case of this clause (iii), the Company shall use reasonable best efforts to consult with Parent prior to or promptly following the taking (or omitting) of any action that would be prohibited or otherwise restricted or required, as applicable, by this Section 6.1 but for this clause (iii) and including consider in good faith any reasonable requests by Parent in respect of such actions or omissions), (iv) as set forth in Section 6.1 of the Effective Time, unless Company Disclosure Letter or (v) with the prior written consent of Parent shall otherwise consent in writing, (which consent shall will not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by this Agreement or as set forth on delayed), the Company Disclosure Schedulewill not, and will cause each Company Subsidiary not to:
(a) The Company shall, and shall cause each Company Subsidiary to, (i) conduct its business only and the business of the Company Subsidiaries other than in the ordinary course and course, in substantially the same manner as heretofore conducted since December 31any material respect, 1999, and the Company and each Company Subsidiary shall (ii) fail to use all commercially reasonable efforts to preserve intact its present business organization organizations, goodwill and preserve its regular services to, assets and maintain its relationships withrights, policyholders, insurers, reinsurers, agents, sales franchises and distribution organizations, underwriters, investment existing relations with customers, brokerssuppliers, suppliers officers, employees and all others having business dealings with itassociates, or (iii) take any action that adversely affects in a material respect the ability of any Party to obtain any regulatory approvals for the Transactions;
(b) Except issue, sell, grant options or rights to purchase or receive, pledge, or authorize or propose the issuance, sale, grant of options or rights to purchase or pledge, or otherwise permit to become outstanding, or authorize the creation of, any additional equity or any additional Rights other than the issuance of Company Common Stock in respect of the vesting, settlement or exercise of Director RSUs, Company RSUs, Company PSUs and Company Stock Options outstanding as contemplated by this Agreementof the date hereof;
(c) (i) split, combine or reclassify any of its equity interests or issue or authorize or propose the Company shall notissuance of any other securities in respect of, and shall not in lieu of or in substitution for its equity interests, or (ii) repurchase, redeem or otherwise acquire, or permit any Company Subsidiary toto purchase, make redeem or propose otherwise acquire, any membership, partnership or other equity interests or Rights, except as required by the terms of the Company Stock Plan and the Director Stock Plan and any related award agreements or to make satisfy any change Tax withholding obligations of the holder thereof or as required by the terms of its securities outstanding on the date of this Agreement (or granted following the date of this Agreement in its dividend practices accordance with this Agreement) by any Company Benefit Plan;
(d) (i) sell, lease, sublease, license, sublicense, abandon, waive, relinquish, transfer, pledge, abandon, assign, swap, mortgage or policies otherwise dispose of or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices subject to any Lien all or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding portion of its assets, businesses or properties other than (A) any material transactions (excluding investment transactions sales, leases, or dispositions in the ordinary course of business consistent with past practice, but including transactions involving the securitization factoring of Assets receivables in the ordinary course of the Company business consistent with past practice or of (B) any Company Subsidiary and transactions involving derivative securitiesdistributions expressly permitted under Section 6.1(e), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), ; (ii) incur acquire (by merger or otherwise) or lease any individual Liability assets or series all or any portion of related Liabilities in excess (or interests in) the business or property of $200,000 any other entity other than in the ordinary course of business consistent with past practice, ; (iii) incur merge, consolidate or enter into any indebtedness for money borrowed in other business combination transaction with any Person (other than as permitted by the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days foregoing clause (ii)); or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree convert from a limited partnership, limited liability company or corporation, as the case may be, to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesentity;
(e) The make or declare dividends or distributions to (i) the holders of Company shall not, nor shall it permit Common Stock or any Company Subsidiary toor (ii) any other equityholders of the Company or any Company Subsidiary (other than any dividend or distribution from a wholly owned Company Subsidiary to the Company or to any other wholly owned Company Subsidiary);
(f) amend the Company’s or any Company Subsidiary’s Organizational Documents as in effect on the date of this Agreement;
(g) enter into any material Contract or Contract that would constitute a Company Specified Contract if in effect as of the date hereof, issue in each case, that is outside the ordinary course of business;
(h) modify, amend, terminate or sell any shares of or interests inassign, or waive or assign any rights under, any Company Specified Contract, in each case, outside the ordinary course of business;
(i) waive, release, assign, settle or compromise any kind to acquire material Proceeding or settle or compromise any shares Proceeding if such settlement or compromise (i) involves a material conduct remedy or material injunctive or similar relief, (ii) involves an admission of criminal wrongdoing by the Company or interests in, any Company Subsidiary or to receive (iii) has in any payment based material respect a restrictive impact on the value of, the capital stock business of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fj) Except (x) as set forth implement or adopt any change in the Company Disclosure Scheduleits GAAP accounting principles, (y) in the ordinary course of business consistent with past practice, practices or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary tomethods, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or moremay be required by GAAP;
(k) Other than in the ordinary course of business consistent with past practiceterminate, the Company shall not, and shall not permit any Company Subsidiary to, enter into cancel or make any material contract changes to the structure, limits or amend or waive any material provision terms and conditions of any material contract which would involve Insurance Policies, including allowing the payment by the Company Insurance Policies to expire without renewing such Insurance Policies or any Company Subsidiary of $200,000 or moreobtaining comparable replacement coverage;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets)make, (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make change or rescind any material express or deemed election elections relating to Taxes, (ii) make a request for a tax ruling settle or compromise any Proceeding, audit or controversy relating to Taxes, (iii) amend any Tax Return, (iv) enter into a Tax Ruling (as defined below), settlement or compromise any closing agreement with respect to any material Tax matterTax, (v) surrender any right to claim a refund or (iiivi) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed Tax purposes, except, in the preparation of its federal income Tax Return for the taxable year ending December 31each case, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business consistent with past practice;
(i) establish, adopt, enter into, terminate or amend, or take any action to accelerate the vesting or payment of any compensation or benefits under, any Company Benefit Plan, except for (A) amendments to Company Benefit Plans made to comply with applicable Law and (B) establishing annual incentive targets and performance goals, in the ordinary course of business consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of the fiscal year ending April 1, 2022 for purposes of the Company Benefit Plans set forth in Section 6.1(m)(i) of the Company Disclosure Letter, (ii) grant to any capital stock current or former director, officer, employee, contractor or consultant any material increase in compensation, bonus or fringe or other benefits, other than with respect to employees holding a position below vice president in the ordinary course of business consistent with past practice or in connection with the Company’s or any Company Subsidiary’s annual merit-based compensation review process or discretionary bonus practices, (iii) grant to any current or former director, officer, employee, contractor or consultant any material increase in change in control, retention, severance or termination pay, except for grants to employees holding a position below vice president in the ordinary course of business consistent with past practice, (iv) enter into any employment, consulting, change in control, retention or severance agreement with any current or former director, officer, employee, contractor or consultant, except for agreements with employees holding a position below vice president entered into in the ordinary course of business consistent with past practice, (v) hire any Person to be an employee of the Company or any Company Subsidiary with a position equivalent to, or more senior than, vice president, (vi) terminate the employment of any current employee with a position equivalent to, or more senior than, vice president if such termination would result in the right to receive payment of material change in control, severance or termination benefits; provided, however, that the Company or a Company Subsidiary may provide unsubsidized continuation coverage required under Section 4980B of the Code or (vii) allow any current, former or new director, officer, employee, contractor or consultant to begin participating in any Company Benefit Plan that provides change in control, severance or termination benefits, regardless of whether the terms of such Company Benefit Plan would otherwise allow such current or former director, officer, employee, contractor or consultant to begin participating in such Company Benefit Plan; provided, however, that the foregoing clauses (ii), (iii), (iv) and (vii) shall not restrict the Company or any Company Subsidiary from granting to any newly hired or promoted employee holding a position below vice president any increase in base compensation, bonus, change in control, retention, severance or termination pay, or fringe or other benefits, or from entering into any employment, retention or severance agreement with any newly hired or promoted Person holding a position below vice president, in each case, in the ordinary course of business consistent with past practice;
(n) (i) incur, assume, guarantee or otherwise become liable for any Indebtedness (directly, contingently or otherwise), other than borrowings under existing revolving credit facilities in the ordinary course of business consistent with past practice in an amount not to exceed $10,000,000, (ii) redeem, purchase repurchase, cancel or otherwise acquire any Indebtedness (directly, contingently or otherwise), (iii) other than with respect to the existing revolving credit facilities, create any material Lien that is not a Permitted Lien on its property or the property of any Company Subsidiary in connection with any pre-existing Indebtedness, new Indebtedness or lease or (iv) make or commit to make any capital expenditures (including payments on financing leases), other than (A) capital expenditures for property, plant and equipment in an amount not to exceed $10,000,000 in the aggregate and (B) commitments and payments on financing leases in the ordinary course of business consistent with past practice;
(o) enter into any transaction or Contracts with any Affiliate or other Person that would be required to be disclosed by the Company under Item 404 of Regulation S-K of the SEC;
(p) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial dissolution or liquidation;
(q) make any loans, advances or capital stock contributions to, or investments in, any Person (other than the Company or any wholly owned Company Subsidiary) other than loans, advances or capital contributions in the form of trade credit granted to customers in the ordinary course of business consistent with past practice;
(r) except as permitted by Section 6.1(d), (i) form any Subsidiary or acquire any equity interest in any other Person (other than in accordance with Contracts in effect on the date hereof), (ii) enter into any new material line of business, or (iii) open a new office of the Company or any of the Company Subsidiaries in any country where neither the Company nor any of the Company Subsidiaries has an office as of the date hereof;
(s) except as permitted by Section 6.1(d), other than the Merger, merge, consolidate, liquidate, dissolve, restructure, recapitalize, statutorily convert or otherwise reorganize the Company or any Company Subsidiary with any Person (including any other Company Subsidiary) or adopt a plan or resolution providing for any such transaction; andprovided, that for the avoidance of doubt, this Section 6.1(s) shall not restrict the Company or any Company Subsidiary from undertaking any employee restructuring or reorganization; or
(t) Neither the Company nor any Company Subsidiary shall agree, in writing agree or otherwise, commit to take any of the actions do anything prohibited by the foregoing clauses (a) through (s)) of this Section 6.1.
Appears in 1 contract
Samples: Merger Agreement (Perspecta Inc.)
Conduct of Business by the Company. The Company covenants and agrees Pending the Merger. Except as to itself and set forth in Section 6.01 of the Company Subsidiaries thatDisclosure Schedule, at all times up expressly provided by this Agreement, required by Law or consented to and including in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement to the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each of its Subsidiaries to (i) conduct the businesses of the Company Subsidiary to, conduct and its business only Subsidiaries in all material respects in the ordinary course and in substantially the same manner as heretofore conducted since December 31of business, 1999, and the Company and each Company Subsidiary shall (ii) use all commercially reasonable efforts to preserve materially intact its present current business organization and to preserve its regular services to, and maintain in all material respects its relationships withof the Company and its Subsidiaries with significant Franchisees and the franchise system as a whole, policyholderskey employees and its material suppliers, insurerslicensors, reinsurerslicensees, agentsdistributors, sales wholesalers, lessors and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having significant business dealings with it;
the Company or any of its Subsidiaries and (biii) Except comply in all material respects with applicable Law, in each case in a manner consistent with past practice. Without limiting the generality of the foregoing, except as contemplated set forth in Section 6.01 of the Company Disclosure Schedule, expressly required by this Agreement, required by Law or consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed and shall be deemed to be given if, within five (5) Business Days after the Company has provided to Parent a written request for consent, Parent has not rejected such request in writing), during the period from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Subsidiary of the Company Subsidiary to:
(a) declare, make authorize, establish a record date for, set aside or propose to pay any dividends on, or make any change other distributions (whether in cash, stock or other equity, property or a combination thereof) in respect of, any of its dividend practices capital stock, other than dividends or policies distributions by a wholly-owned Subsidiary of the Company to its parent;
(b) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in lieu of or in substitution for shares of its underwritingcapital stock;
(c) repurchase, pricingredeem or otherwise acquire any shares of its capital stock or any options, claimswarrants, risk retentionrights, investmentconvertible or exchangeable securities, reinsurance practices stock-settled performance units or policies in other rights to acquire any material respect; and such shares or other rights that give the holder thereof any economic interest of a nature accruing to the holders of such shares, other than (i) the acquisition by the Company agrees of Shares in connection with the surrender of Shares by holders of Company Stock Options in order to pay the exercise price thereof, (ii) the withholding of Shares to satisfy Tax obligations with respect to awards granted pursuant to the Company Stock Plans, (iii) the acquisition by the Company of Shares pursuant to a re-purchase plan that it will notify Parent was publicly announced prior to the date hereof and provide Parent (iv) the acquisition by the Company of Company Stock Options and Restricted Stock Units in connection with information the forfeiture of such awards;
(d) issue, deliver or sell any shares of its capital stock or other voting securities or equity interests, any options, warrants, rights, convertible or exchangeable securities, stock-settled performance units or other rights to acquire any such shares, securities, interests or other rights that give the holder thereof any economic interest of a nature accruing to the holders of such shares or securities, other than (i) upon the exercise or settlement of awards under the Company Stock Plans outstanding on the date of this Agreement (or granted following the date of this Agreement to the extent permitted by this Section 6.01(d)) in reasonable detail regarding accordance with their present terms, and (ii) as required to comply with any Plan as in effect on the date of this Agreement;
(e) amend the Company Charter or the Company By-laws or the comparable organizational documents of any Subsidiary of the Company;
(f) acquire, directly or indirectly, whether by purchase, merger, consolidation or acquisition of stock or assets or otherwise, (A) any other person (or all or substantially all of the assets of any person) or (B) any assets, real property, securities, properties, interests, or businesses that are material to the Company and its Subsidiaries, taken as a whole, other than (x) transactions between the Company and its wholly-owned Subsidiaries, and (excluding investment transactions y) purchases of raw materials, supplies, equipment, inventory and third party software in the ordinary course of business consistent with past practice(it being understood and agreed that the acquisition of any other person (or all or substantially all of the assets of any person) is not in the ordinary course of business);
(g) sell, but transfer, lease, license, sublicense, abandon or otherwise dispose of any of its material properties or assets (including transactions involving capital stock of any Subsidiary of the securitization Company and intangible property), other than (i) sales or other dispositions of Assets products and inventory in the ordinary course of business, (ii) sales or other dispositions of equipment or Intellectual Property that is no longer used in the operations of the Company or any Subsidiary of the Company or (iii) the non-exclusive licensing or sublicensing of Intellectual Property in the ordinary course of business; provided, however, that, notwithstanding anything in this Agreement to the contrary, neither the Company nor any Company Subsidiary and transactions involving derivative securities), whether involving a purchase of its Subsidiaries may sell or sale, that it or refranchise any Company Subsidiary is seriously consideringrestaurant;
(ch) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter incur any indebtedness for borrowed money, issue or bysell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Subsidiary of the Company or guarantee any such indebtedness or any debt securities of another person or enter into any “keep well” or similar agreement to maintain any financial statement condition of another person (other than the Company or any wholly-laws owned Subsidiary of the Company) (unless contemplated herebycollectively, “Indebtedness”), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than (A) the incurrence of Indebtedness permitted by the Securitization Agreement and in an amount not to exceed $2,000,000 in the aggregate; provided, that any such Indebtedness is incurred pursuant to one or more borrowings under Class A-1 Notes (as defined in the Securitization Agreement) issued as of the date of this Agreement, (B) intercompany Indebtedness between the Company and a wholly-owned Subsidiary or between wholly-owned Subsidiaries of the Company and (C) other than Indebtedness incurred in accordance with clause (A), Indebtedness incurred, assumed or otherwise entered into in the ordinary course of business consistent with past practice, (iiiincluding any borrowings under the Company’s existing credit facilities and in respect of letters of credit) incur any indebtedness for money borrowed in an amount not to exceed $2,000,000 in the aggregate for the Company and the Company Subsidiaries or (ii) make any loans or capital contributions to, or investments in, any other person, in excess an aggregate amount of $200,000 2,000,000 or more for any all such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combinationinvestments, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability wholly-owned Subsidiary of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesCompany;
(ei) The Company shall not, nor shall it permit any Company Subsidiary to, issue except as required by applicable Law or sell any shares of or interests in, or rights the terms of any kind to acquire any shares of Plan or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as otherwise set forth in the Company Disclosure Schedule, (yi) increase the compensation, bonus, pension, welfare, severance or termination pay, fringe or other benefits payable or that could become payable by the Company or any of its Subsidiaries to any current or former directors, officers or employees), (ii) enter into any employment, consulting, severance, retention or termination agreement or arrangement with any director or executive officer of the Company, (iii) establish, adopt or enter into or amend in any material respect any collective bargaining agreement or other agreement with a labor union, works council or similar organization, (iv) establish, adopt, enter into, modify or terminate any Plan other than renewals of Plans that are health, welfare and insurance plans in the ordinary course of business consistent with past practice, or (z) as required by the on terms of agreements or plans already not materially more favorable to employees than those in effect or Applicable Law, on the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employeesdate hereof, (v) pay act to accelerate or agree fund or in any other way secure any rights or benefits under any Plan to pay the extent not already provided in any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or presentsuch Plan, (vi) voluntarily recognizepay any bonus to any of the current or former directors, officers, employees or involuntarily become subject toconsultants of the Company or its Subsidiaries, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other promote any employee who is an officer to a position more senior than obligations that arise by operation such employee’s position as of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreementpromote a non-officer employee to an officer position, enter into(viii) grant any new awards under any Plan, adopt (ix) take any action to amend, waive or increase accelerate any indemnification rights or hold harmless arrangements with benefits under any directorsPlan, officers (x) grant, amend or modify any equity or equity-based awards, (xi) hire or terminate without cause any officer, employee, independent contractor or consultant, other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assetsany such person who (A) which in one has or will have an annual base compensation of less than $200,000 and (B) is not a series vice president or more senior employee of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
of its Subsidiaries, or (hxii) Other than in the ordinary course of business consistent with past practiceforgive any loans, the Company shall not, and shall not permit or issue any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
loans (i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts routine travel advances issued in the ordinary course of business), consistent with existing strategiesto directors, officers, contractors or employees of the Company or any of its Subsidiaries;
(j) settle any Action, in each case involving or against the Company or any Subsidiary of the Company, other than (i) sellthe settlement of Actions that require payments by the Company or any Subsidiary of the Company (net of insurance proceeds) in an amount not to exceed, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to $2,000,000, (ii) the settlement of Actions disclosed, reflected or reserved against in the most recent financial condition statements (or the notes thereto) of the CompanyCompany included in the SEC Documents for an amount not materially in excess of the amount so disclosed, any Company Subsidiary, reflected or the Company and the Company Subsidiaries taken as a whole, reserved and, in addition, in the each case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only that do not involve the imposition of restrictions on the business or operations of the Company or any of its Subsidiaries that, in each case, materially interfere with the operations of the Company and its Subsidiaries, taken as a whole and (iii) settlements permitted pursuant to Section 7.11;
(k) make any material change in accounting methods, principles or practices by the Company or any Company Subsidiary materially affecting the consolidated assets, liabilities or results of operations of the Company, except as required (i) by GAAP (or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization or (ii) by Law;
(l) (i) adopt a plan of merger, consolidation, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any Subsidiary of the Company (other than reorganizations solely by or among wholly-owned Subsidiaries of the Company) or (ii) enter into a new line of business or new franchise system;
(m) make, change, revoke or rescind any material election relating to Taxes (including any “check-the-box” election pursuant to Treasury Regulations Section 301.7701-3), make any material amendment with respect to any material Tax Return, settle or compromise any material Tax liability for an amount that exceeds the amount disclosed, reflected or reserved against in the financial statements contained in the SEC Documents, request any rulings from or the execution of any closing agreement with any Governmental Authority (except in connection with a settlement of a Tax liability for an amount that does not exceed the amount disclosed, reflected or reserved against in the financial statements contained in the SEC Documents), surrender any right to claim a material Tax refund, change an annual accounting period for Tax purposes, or change any material accounting method for Tax purposes, except, in each case, for actions taken in the ordinary course of business or required by Law;
(n) make any capital expenditures, other than (i) capital expenditures in accordance with the statement of investment policy set forth budget provided prior to the date hereof by the Company to Parent, (ii) maintenance capital expenditures and required repairs and (iii) any other capital expenditures in an amount not to exceed, in the Company Disclosure Schedule; and aggregate, $2,000,000;
(o) voluntarily (i) terminate, amend, modify or waive material rights or material claims under any Selected Contract or (ii) enter into any Contract that would have been considered a Selected Contract if it had been entered into prior to the date of this Agreement, in each case, other than in the ordinary course of business (provided that in all cases the Company shall furnish provide reasonable advance notice to, and reasonably consult with, Parent prior to Parent a monthly reporttaking any such material actions described in this clause (o));
(p) enter into any material Contract that would, in detail reasonably acceptable to Parentthe Knowledge of the Company, bind Affiliates of all such transactions or other changes the Surviving Company (other than changes in market values the Company, the Surviving Company or ordinary course changes such Subsidiaries of the Company or the Surviving Company) following the Closing;
(q) unless required by applicable Law, reclassify any independent contractor as interest payments, maturities, etc.) affecting Investment Assets an employee of the Company or any Company Subsidiary which took place since the last such reportwho would have an annual base salary exceeding $100,000;
(ji) The fail to use commercially reasonable efforts to renew or maintain insurance policies maintained by the Company agrees that it shall not, nor shall it permit or any Company Subsidiary toor comparable replacement policies, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit or (ii) form any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or morecaptive insurance program;
(ls) Other make any material change to the terms of the Company’s or any of its Subsidiaries’ system-wide policies or procedures with respect to (i) franchisee royalty or other fees and charges, or maintenance of the Sonic Funds or (ii) franchisee incentives or franchisee economic assistance, in each case, other than in the ordinary course of business consistent with past practice, (provided that in all cases the Company shall notprovide reasonable advance notice to, and shall not permit reasonably consult with, Parent prior to any Company Subsidiary to, settle or compromise any claim taking such material actions in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000this clause (s));
(mt) The Company shall notexcept as required by any Contract entered into, and shall not permit any Company Subsidiary tomade available to Parent, purchase or otherwise acquire, except pursuant prior to a contract in effect on the date of this Agreement, (i) open any controlling equity interest restaurant in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of country where the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit does not currently have an owned or franchised restaurant or otherwise engage in any Company Subsidiary to, take other operations in any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed country in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of which the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiarydoes not currently conduct other operations; andor
(tu) Neither the Company nor authorize any Company Subsidiary shall agreeof, in writing or otherwise, commit or agree to take any of the actions prohibited by of, the foregoing actions in the preceding clauses (a) through – (st).
Appears in 1 contract
Samples: Merger Agreement (Sonic Corp)
Conduct of Business by the Company. The Company covenants (a) From and agrees after the date hereof until the earlier of the LinnCo Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to itself and the Company Subsidiaries thator any of its Subsidiaries, at all times up to and including (ii) with the Effective Time, unless Parent shall otherwise prior written consent in writing, of LinnCo (which consent shall not be unreasonably withheld), (iii) as may be contemplated or as otherwise expressly permitted or contemplated required by this Agreement or (iv) as set forth on in Section 5.1(a) of the Company Disclosure Schedule:
(a) The , the Company shall, covenants and agrees that the business of the Company and its Subsidiaries shall cause each Company Subsidiary to, conduct its business only be conducted in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its their present business organization lines of business, maintain their rights, franchises and Company Permits and preserve their relationships with customers and suppliers; provided, however, that no action by the Company or its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings Subsidiaries with it;respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except The Company agrees with the Linn Parties, on behalf of itself and its Subsidiaries, that from the date hereof and prior to the earlier of the LinnCo Effective Time and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company or any of its Subsidiaries, (ii) as may be consented to by LinnCo (which consent shall not be unreasonably withheld), (iii) as may be contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(b) of the Company Disclosure Schedule, the Company:
(A) shall not adopt any amendments to its certificate of incorporation or bylaws or similar applicable organizational documents, and shall not permit any of its Subsidiaries to adopt any amendments to its certificate of incorporation or bylaws or similar applicable organizational documents;
(B) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(C) except in the ordinary course of business, shall not, and shall not permit any of its Subsidiaries that is not wholly owned by the Company or wholly owned Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except (1) dividends or distributions by any Subsidiaries only to the Company or to any Subsidiary of the Company in the ordinary course of business, (2) dividends or distributions required under the applicable organizational documents of such entity in effect on the date of this Agreement, and (3) regular quarterly cash dividends with customary record and payment dates on the shares of the Company Common Stock not in excess of $0.08 per share per quarter;
(D) shall not, and shall not permit any of its material Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, other than the Mergers and other than any mergers, consolidations, restructurings or reorganizations solely among the Company and its Subsidiaries or among its Subsidiaries, or take any action with respect to any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Mergers or any other transaction contemplated by this Agreement;
(E) shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make any loans, advances or capital contributions to, or investments in, any other person with a value in excess of $25 million in the aggregate, except (1) as contemplated by the Company’s fiscal 2013 budget and capital expenditure plan, previously provided to LinnCo (the “Company 2013 Budget”) (whether or not such acquisition, loan, advance, capital contribution or investment is made during the 2013 fiscal year) or (2) as made in connection with any transaction among the Company and its wholly owned Subsidiaries or among its wholly owned Subsidiaries; provided, however, that the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make any acquisition of any other person or propose business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to make any change in its dividend practices prevent, materially impede or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and materially delay the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets consummation of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it Mergers or any Company Subsidiary is seriously consideringother transaction contemplated by this Agreement;
(cF) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, (i) amend its charter sell, lease, license, transfer, exchange or byswap, or otherwise dispose of or encumber any properties or non-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities cash assets with a value in excess of $200,000 25 million in the aggregate, except (1) sales, transfers and dispositions of obsolete or worthless equipment, (2) sales, transfers and dispositions of inventory, commodities and produced Hydrocarbons, crude oil and refined products in the ordinary course of business, or (3) sales, leases, transfers or other dispositions made in connection with any transaction among the Company and its wholly owned Subsidiaries or among its wholly owned Subsidiaries;
(G) shall not, and shall not permit any of its Subsidiaries to, authorize any capital expenditures in excess of $25 million in the aggregate, except for (1) expenditures contemplated by the Company 2013 Budget (whether or not such capital expenditure is made during the 2013 fiscal year), or (2) expenditures made in response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or otherwise;
(H) shall not, and shall not permit any of its Subsidiaries to, enter into any new Contract to sell Hydrocarbons other than in the ordinary course of business consistent with past practice, but in no event having a duration longer than 120 days;
(iiiI) incur except as required by applicable Law or the terms of any indebtedness for money borrowed Company Benefit Plan existing and as in effect on the date of this Agreement, shall not, and shall not permit any of its Subsidiaries to, (1) establish, adopt, amend, modify, commence participation in or terminate (or commit to establish, adopt, amend, modify, commence participation in or terminate) any Collective Bargaining Agreement, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, stock option, restricted stock agreement, plan or arrangement covering any current or former directors, officers, employees, consultants, independent contractors or other service providers of the Company or any of its Subsidiaries or other existing Company Benefit Plan (other than amendments or modifications to broad-based Company Benefit Plans in the aggregate for ordinary course of business that do not materially increase the cost or expense to the Company and of providing or administering such benefits), (2) increase in any manner the compensation, severance or benefits of any of the current or former directors, officers, employees, consultants, independent contractors or other service providers of the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combinationSubsidiaries, other than a Superior Acquisition Proposal as permitted herein, (v) prior increases in base salary to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents employees of the Company in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person practice or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee connection with a promotion of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than such employee in the ordinary course of business consistent with past practice, provided that such increases in base salary shall not exceed 5% in the aggregate (viiion an annualized basis) enter into or, in the case of any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated herebyindividual employee with an annual base compensation greater than $150,000, 5% for any individual employee (on an annualized basis), (ix3) violate any of its covenants under the Pooling Agreement (as defined below)pay or award, or (x) modify commit to pay or award, any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall notbonuses or incentive compensation, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) than in the ordinary course of business consistent business, (4) enter into any new or modify any existing employment, severance, termination, retention or consulting agreement with past practiceany current or former directors, officers, employees, consultants, independent contractors or other service providers of the Company or any of its Subsidiaries, (5) accelerate any rights or benefits, (6) fund any rabbi trust or similar arrangement, (7) change any actuarial assumptions used to calculate funding obligations with respect to any Company Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or applicable Law, or (z8) hire or terminate the employment or services of (other than for cause) as required by the terms of agreements any officer, employee, independent contractor or plans already in effect or Applicable Law, consultant who has annual base compensation greater than $150,000; provided that the Company may hire any officer, employee, independent contractor or consultant with an annual base compensation greater than $150,000, so long as the annual base compensation of such new hire is on market terms, in order to replace any officer, employee, independent contractor or consultant whose employment or services with the Company or any of its Subsidiaries has been terminated;
(J) shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject Subsidiaries to, any labor organization materially change financial accounting policies or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party procedures or any of its Subsidiaries methods of reporting income, deductions or any other Personmaterial items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(gK) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital expenditures stock or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which ownership interest in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing Company Subsidiary is a partyBenefit Plans (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable or unexercised options or warrants outstanding on the date hereof), other than (1) issuances of shares of Company Common Stock in respect of the exercise or settlement of any Company Stock Awards outstanding on the date hereof, (2) the sale of shares of Company Common Stock pursuant to the exercise of Company Options if necessary to effectuate an option direction upon exercise or for withholding of Taxes, or (3) for transactions among the Company and its wholly owned Subsidiaries or among its wholly owned Subsidiaries;
(hL) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive directly or indirectly, purchase, redeem or otherwise acquire any rights with a value in excess shares of $100,000 the capital stock of any of them or any rights, warrants or options to acquire any such shares, except for transactions among the Company and its Subsidiaries or among its Subsidiaries and other rights which are material to any contract than the acquisition of shares of Company Common Stock from a holder of a Company Option or make any payment, direct Company Stock Award in satisfaction of withholding obligations or indirect, in payment of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out exercise price thereof;
(iM) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, other than pursuant to the operation incur, assume, guarantee or otherwise become liable for any indebtedness for borrowed money or any guarantee of separate accounts such indebtedness, except (1) for any indebtedness incurred in the ordinary course of business, consistent with existing strategies, (i2) sell, lease, mortgage, encumber or otherwise grant for any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or indebtedness among the Company and its wholly owned Subsidiaries or among its wholly owned Subsidiaries, (3) for any indebtedness incurred to replace, renew, extend, refinance or refund any existing indebtedness on substantially the same or more favorable terms to the Company than such existing indebtedness, (4) for any guarantees by the Company of indebtedness of Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company guarantees by its Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets indebtedness of the Company or any Subsidiary of the Company, which indebtedness is incurred in compliance with this Section 5.1(b) and (5) with respect to any indebtedness not in accordance with clauses (1) through (4), for any indebtedness not to exceed $10 million in aggregate principal amount outstanding at the time incurred by the Company or any of its Subsidiaries; provided, however, that in the case of each of clauses (1) through (5) such indebtedness does not impose or result in any additional restrictions or - 52 - limitations that would be material to the Company and its Subsidiaries, or, following the Closing, the Linn Parties and their Subsidiaries, other than any obligation to make payments on such indebtedness and other than any restrictions or limitations to which the Company or any Subsidiary which took place since is currently subject under the last such reportterms of any indebtedness outstanding as of the date hereof;
(jN) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practicebusiness, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, modify, amend or terminate, or waive any rights under any Company Material Contract or under any Company Permit, or enter into any material contract new Contract which would be a Company Material Contract, in each case in a manner or amend with an effect that is adverse to the Company and its Subsidiaries, taken as a whole, or waive which would reasonably be expected to, after the LinnCo Effective Time, restrict or limit in any material provision of respect any material contract which would involve Linn Party, the payment by the Surviving Company or any Company Subsidiary of $200,000 their respective affiliates from engaging in any business or morecompeting in any geographic location with any person;
(lO) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive, release, assign, settle or compromise any claim in any actionclaim, proceeding action or investigation which could result in an expenditure for proceeding, other than waivers, releases, assignments, settlements or compromises (1) equal to or lesser than the amounts reserved with respect thereto on the most recent consolidated balance sheet of the Company and its Subsidiaries included in the Company Subsidiaries SEC Documents or (2) that do not exceed $1 million in excess of $200,000the aggregate;
(mP) The shall not make, change or revoke any Tax election outside the ordinary course of business, change any Tax accounting method, file any amended Tax Return, enter into any closing agreement, request any Tax ruling, settle or compromise any Tax proceeding, or surrender any claim for a refund of Taxes, in each case, if such action would reasonably be expected to increase by a material amount the Taxes of the Company, HoldCo, LinnCo or Linn;
(Q) except as otherwise permitted by this Agreement, any refinancing permitted by clauses (M)(3) and (4) above or for transactions between the Company and its Subsidiaries or among its Subsidiaries, shall not, and shall not permit any Company Subsidiary toof its Subsidiaries, purchase to prepay, redeem, repurchase, defease, cancel or otherwise acquireacquire any indebtedness or guarantees thereof of the Company or any Subsidiary, except pursuant other than (1) at stated maturity and (2) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to a contract which holders of such indebtedness or guarantees thereof may be entitled), in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;hereof; and
(nR) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the foregoing actions that are prohibited by the foregoing pursuant to clauses (aA) through (sQ) of this Section 5.1(b).
Appears in 1 contract
Conduct of Business by the Company. The Company covenants (a) From and agrees after the date hereof until the earlier of the LinnCo Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to itself and the Company Subsidiaries thator any of its Subsidiaries, at all times up to and including (ii) with the Effective Time, unless Parent shall otherwise prior written consent in writing, of LinnCo (which consent shall not be unreasonably withheld), (iii) as may be contemplated or as otherwise expressly permitted or contemplated required by this Agreement or (iv) as set forth on in Section 5.1(a) of the Company Disclosure Schedule:
(a) The , the Company shall, covenants and agrees that the business of the Company and its Subsidiaries shall cause each Company Subsidiary to, conduct its business only be conducted in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its their present business organization lines of business, maintain their rights, franchises and Company Permits and preserve their relationships with customers and suppliers; provided, however, that no action by the Company or its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings Subsidiaries with it;respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except The Company agrees with the Linn Parties, on behalf of itself and its Subsidiaries, that from the date hereof and prior to the earlier of the LinnCo Effective Time and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company or any of its Subsidiaries, (ii) as may be consented to by LinnCo (which consent shall not be unreasonably withheld), (iii) as may be contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(b) of the Company Disclosure Schedule, the Company:
(A) shall not adopt any amendments to its certificate of incorporation or bylaws or similar applicable organizational documents, and shall not permit any of its Subsidiaries to adopt any amendments to its certificate of incorporation or bylaws or similar applicable organizational documents;
(B) shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make split, combine or propose to make reclassify any change of its capital stock or issue or authorize the issuance of any other securities in its dividend practices or policies respect of, in lieu of or in substitution for shares of its underwritingcapital stock, pricing, claims, risk retention, investment, reinsurance practices or policies in except for any material respect; and such transaction by a wholly owned Subsidiary of the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions which remains a wholly owned Subsidiary after consummation of such transaction;
(excluding investment transactions C) except in the ordinary course of business consistent with past practicebusiness, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any of its Subsidiaries that is not wholly owned by the Company Subsidiary or wholly owned Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (i) amend its charter or by-laws (unless contemplated hereby)whether in cash, (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practiceassets, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement stock or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability securities of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined belowSubsidiaries), except (1) dividends or (x) modify distributions by any contract with respect Subsidiaries only to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or to any Company Subsidiary;
(f) Except (x) as set forth in Subsidiary of the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i2) sell, lease, mortgage, encumber dividends or otherwise grant any interest in or dispose distributions required under the applicable organizational documents of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract entity in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Samples: Merger Agreement
Conduct of Business by the Company. The Company covenants During the period from the date of this Agreement and agrees as continuing until the earlier of the termination of this Agreement pursuant to itself and its terms or the Closing (such period, the “Interim Period”), the Company shall, and shall cause each of its Subsidiaries thatto, at all times up (A) carry on their respective businesses in the ordinary course consistent with past practice and in material compliance with applicable Law and company policies, and (B) use commercially reasonable efforts to maintain and including preserve their respective businesses, material assets and organizations intact, retain their respective present officers and maintain and preserve their respective goodwill and relationships with customers, suppliers, employees (other than employee terminations in the Effective Timeordinary course of business), unless licensors, Governmental Entities, creditors and others having business relations with such Persons, except in each case: (a) to the extent that Parent shall otherwise consent in writing, writing (which consent shall not be unreasonably withheld, conditioned or delayed); (b) as otherwise expressly permitted or contemplated by this Agreement, the Recapitalization or Section 6.1 of the Company Disclosure Letter; or (c) as required by applicable Law or Governmental Entity. Notwithstanding anything to the contrary contained herein, to the extent the Company or any of its Subsidiaries takes or fails to take any commercially reasonable action directly in response to any COVID-19 Measures, including the establishment of any commercially reasonable policy, procedure or protocol, such action or failure to act shall not be deemed to constitute an action taken in violation or breach of Section 6.1(a) through (w) so long as, in each instance, prior to taking or omitting to take any such action that would otherwise violate or breach this Section 6.1, the Company provides Parent with advance notice of such anticipated action and, with respect to taking or omitting to take any action that would violate or breach clauses (a), (c), (d), (e), (f), (h), (m), (n) or (w) (solely as clause (w) pertains to the foregoing clauses), receives Parent’s prior written consent (which may be given or withheld in its sole discretion). Without limiting the generality of the foregoing, except as required or expressly contemplated by the terms of this Agreement or as set forth on Section 6.1 of the Company Disclosure Schedule:
(a) The Company shallLetter, or as required by applicable Law, without the prior written consent of Parent, during the period from the date of this Agreement and shall cause each Company Subsidiary to, conduct continuing until the earlier of the termination of this Agreement pursuant to its business only in terms or the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this AgreementClosing, the Company shall not, and shall cause its Subsidiaries not permit any Company Subsidiary to, make do any of the following:
(a) except as otherwise required by any existing Benefit Plan, this Agreement or propose applicable Law: (i) increase or grant any increase in the compensation, bonus, fringe or other benefits of, or pay, grant or promise any bonus to, any current or former employee, officer, director, independent contractor or other individual service provider of the Company or any of its Subsidiaries whose annual base salary (or annual base wages or annual fees) would exceed three hundred thousand dollars ($300,000) after any increase (other than as permitted by subclause (vi) below or new hires pursuant to make subclause (v) below); (ii) grant, pay or increase any severance, change in its dividend practices or policies or in its underwritingcontrol, pricingdeferred compensation, claims, risk retention, investmentequity or equity-based or other similar payment or benefit (other than as permitted by subclause (vi) below) to any current or former employee, reinsurance practices officer, director, independent contractor or policies in any material respect; and other individual service provider of the Company agrees or any of its Subsidiaries (other than new hires pursuant to subclause (v) below, or severance, change in control, deferred compensation, retention, equity or equity-based payments or benefits granted or paid to current employees or officers of the Company or any of its Subsidiaries that do not exceed one hundred fifty thousand dollars ($150,000) per Person); (iii) enter into, commence participation in, adopt, establish, modify, amend or terminate any Benefit Plan or any compensation or benefit plan, policy, program, agreement, trust or arrangement that would have constituted a Benefit Plan if it will notify Parent had been in effect on the date of this Agreement (other than annual renewal of group health and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions welfare plans in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of practice that does not result in a material increase in cost to the Company or any of any Company Subsidiary and transactions involving derivative securitiesits Subsidiaries), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, ; (iv) agree take any action to accelerate the vesting or payment of, or otherwise fund or secure the payment of, any mergercompensation or benefits under any Benefit Plan or otherwise; (v) make employment offers, consolidation, demutualization, acquisition, redomestication, sale of all hire or a substantial portion terminate (other than for cause) any employee or any other individual who is providing or will provide services to the Company or any of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combinationSubsidiaries, other than a Superior Acquisition Proposal as permitted hereinany employment offers, hires or terminations of employees with an annual cash compensation (vincluding salary and bonus) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other of less than contracts with insurance agents four hundred thousand dollars ($400,000) in the ordinary course of business consistent with past practices, ; or (vi) enter into any contract limiting commit to make equity grants under the ability of the Company LTIP or of any Company Subsidiary to engage in any businessEmployee Stock Purchase Plan, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than commitments in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect subject in each case to the subject approval by Parent’s compensation committee following the Closing of any of the foregoing clausessuch equity grants) (such commitments, “Interim LTIP/ESPP Commitments”);
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Samples: Merger Agreement (VPC Impact Acquisition Holdings III, Inc.)
Conduct of Business by the Company. Pending the Closing. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to between the date of this Agreement and including the Effective Time, except as set forth in Section 5.01 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement (including, without limitation, Section 5.12(b)), unless Parent shall otherwise consent agree in writing, which consent agreement shall not be unreasonably withheldwithheld or delayed, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on (x) the respective businesses of the Company Disclosure Schedule:
and the Company Subsidiaries (aother than WME) The Company shall, and shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and Subsidiaries (other than WME) shall not permit take any Company Subsidiary toaction except in, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iiiy) incur any indebtedness for money borrowed in the aggregate for Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect WME) and to Investment Assets) which in one or a series preserve the current relationships of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation (other than WME) with such of the transactions contemplated herebycustomers, suppliers and expenditures required to be made pursuant to existing contracts to other persons with which the Company or any Company Subsidiary is a party;
(hother than WME) Other than has significant business relations in the ordinary course of order to preserve substantially intact its business consistent organization and (z) with past practicerespect to WME, the Company shall notwill use all reasonable efforts to cause WME to comply with the covenants contained in this Section 5.01, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
including clauses (a) through (i) The Company shall notbelow including, and shall not permit without limitation, by voting on any Company Subsidiary to, other than pursuant to the operation matter presented for a vote of separate accounts in the ordinary course stockholders of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose WME all shares of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross WME capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment stock owned by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business a manner consistent with past practicethis clause (z), and by directing those of its employees who are on the Board of Directors of WME to vote on all matters presented for action by such Board in a manner consistent with this clause (z). By way of amplification and not limitation, except as set forth in Section 5.01 of the Company shall not, and shall not permit Disclosure Schedule or as expressly contemplated by any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date other provision of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare(other than WME) shall, set aside between the date of this Agreement and the Effective Time, directly or pay any dividends indirectly, do, or distributions (whether in cashagree to do, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock following without the prior written consent of the Company Parent, which consent shall not be unreasonably withheld or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).delayed:
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as During the period from the date of this Agreement to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct carry on its business only in the ordinary course consistent with past practice and in substantially material compliance with all applicable laws, rules, regulations and treaties and, to the same manner as heretofore conducted since December 31extent consistent therewith, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its present current business organization organizations, keep available the services of its current officers, employees and consultants and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings with it;
(b) Except as contemplated by others, except to the extent that the Company's failure to use such commercially reasonable efforts would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. In addition to and without limiting the generality of the foregoing, during the period from the date of this AgreementAgreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make without Parent's prior written consent, or propose to except as set forth in Section 4.01(a) of the Company Disclosure Schedule:
(i) (x) declare, set aside or pay any dividends on, or make any change other distributions (whether in cash, stock or property) in respect of, any of its dividend practices capital stock, other than dividends or policies distributions by a direct or indirect wholly owned Subsidiary of the Company to its parent, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its underwritingcapital stock or (z) purchase, pricingredeem 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;
(ii) except as provided in Section 5.04, issue, deliver, sell, grant, amend the terms of, reprice, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities, or any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock based performance units, including pursuant to Contracts as in effect on the date hereof (other than the issuance of shares of Company Common Stock upon the exercise of Company Stock Options or Warrants, in each case outstanding on the date hereof in accordance with their terms on the date hereof);
(iii) amend the Company Charter or the Company Bylaws or other comparable charter or organizational documents of any of the Company's Subsidiaries;
(iv) directly or indirectly acquire (x) by merging or consolidating with, or by purchasing assets of, or by any other manner, any person or division, business or equity interest of any person or (y) any asset or assets that are material to the Company and its Subsidiaries, taken as a whole, except purchases of components, raw materials or supplies in the ordinary course of business consistent with past practice;
(v) (x) sell, lease, license, mortgage, sell and leaseback or otherwise encumber or subject to any Lien or otherwise dispose of any of its material properties or other assets or any interests therein (including securitizations), except for sales of inventory and used equipment in the ordinary course of business consistent with past practice or pursuant to contracts or agreements in effect as of the date hereof; or (y) enter into, modify, renew, extend or amend any lease of material property, except for modifications or amendments that are not adverse to the Company and its Subsidiaries;
(vi) (x) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person (including any Related Party) (other than any such indebtedness or guarantees under existing facilities or among the Company and its direct or indirect wholly owned Subsidiaries or among the direct and indirect wholly owned Subsidiaries), issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing or (y) make any loans, advances or capital contributions to, or investments in, any other person (including any Related Party), other than to or in the Company or any direct or indirect wholly owned Subsidiary of the Company or to employees in respect of travel expenses in the ordinary course of business consistent with past practice;
(vii) make any new capital expenditure or expenditures which, individually, is in excess of $100,000 or, in the aggregate, are in excess of $250,000;
(viii) (v) pay, discharge, settle or satisfy any claims, risk retentionliabilities, investmentobligations or litigation (absolute, reinsurance practices accrued, asserted or policies unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in any material respect; and the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities disclosed, reflected or reserved against in the most recent audited financial statements (or the notes thereto) of the Company agrees that it will notify Parent and provide Parent with information included in reasonable detail regarding any material transactions the Filed Company SEC Documents (excluding investment transactions for amounts not in excess of such reserves) or incurred since the date of such financial statements in the ordinary course of business consistent with past practice, (w) cancel any material note or account receivable or discount in any material respect any material account receivable, (x) waive or assign any claims or rights of substantial value, (y) waive any benefits of, or agree to modify in any respect, or, subject to the terms hereof, fail to enforce, or consent to any matter with respect to which consent is required under, any standstill or similar agreement to which the Company or any of its Subsidiaries is a party or (z) waive any material benefits of, or agree to modify in any material respect, or, subject to the terms hereof, fail to enforce in any material respect, or consent to any matter with respect to which consent is required under, any material confidentiality or similar agreement to which the Company or any of its Subsidiaries is a party;
(ix) enter into any Contracts (including any license agreements, but including transactions involving excluding confidentiality agreements containing customary terms which do not impose any obligations on the securitization Company or its Subsidiaries other than those relating to the treatment of Assets confidential information) relating to the license, marketing, co-promotion, manufacturing, research, development, distribution, training, sale or supply by third parties of products of the Company or any Subsidiary of any the Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it products licensed by the Company or any Subsidiary of the Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods which, individually, has aggregate future payment or practices, including without limitation any change other obligations with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities a value in excess of $200,000 100,000, or, in the aggregate, have future payment or other obligations with a value in excess of $250,000;
(x) except to the extent permitted under Section 4.02, enter into, modify, amend or terminate any Contract or waive, release or assign any material rights or claims thereunder, which if so entered into, modified, amended, terminated, waived, released or assigned would reasonably be expected to (A) have a Material Adverse Effect, (B) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (C) prevent or materially delay the consummation of the transactions contemplated by this Agreement;
(xi) enter into any Contract with a value, individually or together with all Contracts entered into pursuant to this Section 4.01(a)(xi) and together with all Contracts entered into pursuant to Section 4.01(a)(xii) hereof, in the aggregate, in excess of $100,000 to the extent consummation of the transactions contemplated by this Agreement or compliance by the Company with the provisions of this Agreement would reasonably be expected to conflict with, or result in a violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of the Company or any of its Subsidiaries under, or give rise to any increased, additional, accelerated, or guaranteed right or entitlements of any third party under, or result in any material alteration of, any provision of such Contract;
(xii) enter into any Contract with a value, individually or together with all Contracts entered into pursuant to this Section 4.01(a)(xii) and together with all Contracts entered into pursuant to Section 4.01(a)(xi) hereof, in the aggregate, in excess of $100,000 containing any restriction on the ability of the Company or any of its Subsidiaries to assign its rights, interests or obligations thereunder, unless such restriction expressly excludes any assignment to Parent or any of its Subsidiaries in connection with or following the consummation of the Merger and the other transactions contemplated by this Agreement;
(xiii) sell, transfer or license to any person or otherwise extend, amend or modify any material rights to the Intellectual Property Rights of the Company or any of its Subsidiaries other than in the ordinary course of business consistent with past practice;
(xiv) except as otherwise contemplated by this Agreement or as required to comply with applicable law or the terms of any plan or agreement in effect on the date hereof,
(A) adopt, enter into, terminate or amend (iiiI) incur any indebtedness for money borrowed in the aggregate for collective bargaining agreement or Company Benefit Plan or (II) any Company Benefit Agreement or other material agreement, plan or policy involving the Company and the Company Subsidiaries in excess of $200,000 for or any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its AssetsSubsidiaries and one or more of their respective current or former directors, bulk officers, employees or assumption reinsurance arrangement consultants;
(B) increase in any manner the compensation, bonus or fringe or other similar reorganizationbenefits of, arrangement or business combinationpay any bonus of any kind or amount whatsoever to, any current or former director, officer, employee or consultant, other than a Superior Acquisition Proposal normal increases in compensation to non-executive employees consistent with past practice;
(C) pay any benefit or amount not required under any Company Benefit Plan or Company Benefit Agreement or any other benefit plan or arrangement of the Company or any of its Subsidiaries as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, in effect on the date of this Agreement other than contracts with insurance agents the payment of compensation and severance in the ordinary course of business consistent with past practicespractice;
(D) increase in any manner the severance or termination pay of any current or former director, (vi) enter into any contract limiting the ability officer, employee or consultant of the Company or any of its Subsidiaries;
(E) (i) grant or amend any awards of Company Stock Options, "phantom" stock, stock appreciation rights, "phantom" stock rights, stock based or stock related awards, performance units or restricted stock (including the grant or repricing of Company Stock Options, "phantom" stock, stock appreciation rights, "phantom" stock rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any Company Benefit Agreements, Company Benefit Plans or agreements or awards made thereunder), or (ii) amend the terms of any Company Subsidiary to engage in any businessbonus, to compete with any Personincentive, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money performance or other financial obligation of any Person compensation plan or arrangement, Company Benefit Agreement or Company Benefit Plan, other than in the ordinary course of business consistent with past practice, ;
(viiiF) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), amend or (x) modify any Company Stock Option or Warrant;
(G) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or Company Benefit Plan or Company Benefit Agreement;
(H) take any action to reprice or accelerate the vesting or payment of any compensation or benefit under any Company Benefit Plan or Company Benefit Agreement; or
(I) materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company Pension Plan or change the subject of manner in which contributions to any of Company Pension Plan are made or the foregoing clausesbasis on which such contributions are determined;
(exv) The Company shall not, nor shall it permit revalue any Company Subsidiary to, issue or sell any shares material assets of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or make any change in accounting methods, principles or practices, other Person;
(g) Other than in the ordinary course of business consistent any such changes required to comply with past practiceGAAP or applicable law; provided, that the Company shall not, notify and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than consult with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, such revaluation or (iii) with respect change prior to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Lawimplementation;
(sxvi) Other than in the ordinary course of business and consistent with past practice, neither the Company nor enter into or modify any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company SubsidiaryRelated Party Transaction; andor
(txvii) Neither the Company nor authorize any Company Subsidiary shall agreeof, in writing or otherwisecommit, resolve, propose or agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company its Subsidiaries that, at all times up prior to and including the Effective Time, unless Parent shall otherwise consent has consented in writing, which consent shall not be unreasonably withheld, or and except as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the business of the Company and its Subsidiaries shall be conducted only in the ordinary course of business consistent with past practices and, to the extent consistent therewith, the Company and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact, maintain existing relations and goodwill with Governmental Authorities, customers, suppliers, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of the Company and its Subsidiaries. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as otherwise expressly contemplated by this Agreement, (B) as Parent may consent in writing or (C) as set forth in Section 7.1 of the Company Disclosure Letter, the Company shall notnot directly or indirectly, and shall not permit any of its Subsidiaries to:
(a) amend the Company Articles of Incorporation or Company Bylaws or other applicable governing instruments or the organizational documents of any of its Subsidiaries;
(b) merge or consolidate with any Person or acquire (whether by acquisition of stock or assets, joint venture or otherwise) any Person or assets, in any single transaction (or series of related transactions) in excess of $100,000;
(c) (i) adjust, reclassify, split, combine, subdivide, authorize for issuance, issue or sell, pledge, dispose of or subject to any Lien any shares of any class of capital stock or other equity interest of the Company or any Subsidiary toor any options, make warrants, restricted stock, restricted stock units, convertible securities, stock appreciation rights, performance units, bonus stock, “phantom” stock rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or propose other rights of any kind to make acquire any such shares or any other equity interest, of the Company or any Subsidiary, other than issuances of shares of the Company Common Stock upon exercise or settlement of the Company Equity Awards outstanding on the date of this Agreement or (ii) repurchase, redeem or otherwise acquire any securities or equity equivalents except in the ordinary course of business in connection with (x) the cashless exercise of the Company Options in accordance with the Company Stock Plans, or (y) the settlement of the Company Equity Awards or the Company Options, in each case, in order to satisfy withholding or exercise price obligations in accordance with the Company Stock Plans;
(d) except to the extent required under any Company Benefit Plan as in effect on the date of this Agreement, (i) increase the compensation (including bonus opportunities) or fringe benefits of any of its directors, executive officers or employees (except in the ordinary course of business consistent with past practice with respect to employees who are not executive officers or parties to an employment or change in its dividend practices control agreement), (ii) grant any severance or policies or in its underwritingtermination pay, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions other than nominal severance to terminated employees in the ordinary course of business consistent with past practice, but including transactions involving (iii) make any new equity awards to any director, officer, employee or contractor, (iv) enter into or amend any employment, consulting, change in control or severance agreement or arrangement with any of its present, former or future directors, officers, employees or contractors, (v) establish, adopt, enter into, freeze or amend in any material respect or terminate any Company Benefit Plan or, except as otherwise provided herein, take any action to accelerate entitlement to compensation or benefits under any Company Benefit Plan or otherwise for the securitization of Assets of the Company or benefit of any Company Subsidiary and transactions involving derivative securitiespresent, former or future director, officer, employee or contractor, in each such case, except as otherwise permitted pursuant to clauses (i), whether involving a purchase (ii) or sale(iii) of this paragraph; provided that in no event may any tax gross-up or tax reimbursement feature be granted or made more favorable to any individual, that it (vi) pay, accrue or certify performance level achievements at levels in excess of actually achieved performance in respect of any component of an incentive-based award, or amend or waive any performance or vesting criteria or accelerate vesting, exercisability, distribution, settlement or funding under any Company Subsidiary is seriously considering;
(c) The Company shall not make Benefit Plan or otherwise for the benefit of any material change in accounting methods present, former or practicesfuture director, including without limitation any change with respect to establishment of reserves for unearned premiumsofficer, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, employee or any change in depreciation or amortization policies or rates adopted by itcontractor, except as required by Applicable Lawthe terms of the Company Benefit Plans as in effect on the date hereof, GAAP (vii) take any action with respect to salary, compensation, benefits or SAPother terms and conditions of employment that would result in the holder of an employment or change in control agreement having “good reason” (within the meaning of such agreement) to terminate employment and collect severance payments and benefits pursuant to such agreement, and (viii) terminate the employment of any holder of an employment or change in control agreement other than for “cause” (within the meaning of such agreement);
(de) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend declare, set aside, make or pay any dividend or other distribution or payment (whether in cash, equity interests or property or any combination thereof) with respect to any shares of any class of capital stock or other equity interests of the Company or any of its charter Subsidiaries (other than dividends or bydistributions by any Subsidiary to the Company or another wholly-laws owned Subsidiary) or (unless contemplated hereby)ii) redeem, purchase or otherwise acquire any of the Company’s or any of its Subsidiaries’ capital stock, or make any commitment for any such action other than pursuant to the Company Stock Plans as in effect on the date hereof;
(f) sell, lease, license, subject to a Lien, encumber (including by the grant of any option thereon) or otherwise surrender, relinquish or dispose of any of the assets or properties of the Company or its Subsidiaries (including capital stock of Subsidiaries) except for (i) sales of surplus or obsolete equipment, (ii) incur any individual Liability sales, leases, licenses or series other transfers between the Company and its wholly-owned Subsidiaries or between those Subsidiaries or (iii) sales, leases, licenses or other dispositions of related Liabilities assets or properties with a fair market value not in excess of $200,000 100,000;
(g) enter into any joint venture, partnership or other similar arrangement or make any loan, capital contribution or advance to or investment in any other Person (other than the Company or any wholly-owned Subsidiary of the Company);
(h) change any of the material accounting methods, policies, principles, procedures or practices except as may be required as a result of a change in GAAP;
(i) fail to maintain in full force without interruption its present insurance policies or comparable insurance coverage;
(j) (i) make or rescind any material election relating to Taxes, including elections for any and all joint ventures, partnerships, limited liability companies or other investments where it has the capacity to make such binding election, (ii) settle or compromise any material Proceeding relating to Taxes, except to the extent of any reserve reflected on the Company’s consolidated balance sheet as of December 31, 2010 as filed with the SEC in its Annual Report on Form 10-K for the year then ended relating to such matter that was established in the ordinary course of business consistent with past practice, (iii) change in any material respect any of its methods of reporting any item for Tax purposes from those employed in the preparation of its Tax returns for the most recent taxable year for which a return has been filed, (iv) amend any material Return or file any material refund claim, (v) enter into a closing agreement with any taxing authorities, or (vi) give or request any waiver of a statute of limitations with respect to any Tax or Tax Return;
(k) settle or compromise any Proceeding, other than in the ordinary course of business consistent with past practice, or enter into any consent, decree, injunction or similar restraint or form of equitable relief in settlement of any material Proceeding or waive, release or assign any rights or claims;
(l) (i) create, incur or assume any Debt, issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any Debt or debt securities of another Person, enter into any “keep well” or other Contract to maintain any financial condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, except intercompany Debt among the Company and its Subsidiaries in the ordinary course of business consistent with past practice; (ii) repurchase, repay, defease or pre-pay any Debt, except (A) repayments in the ordinary course of business or (B) repayments of indebtedness by a Subsidiary of the Company to the Company or its wholly-owned Subsidiaries; or (iii) except with respect any Proceeding, pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary course of business consistent with past practice;
(m) (i) mortgage, pledge, or suffer to exist any Liens (other than Permitted Liens) on, any asset or property, or (ii) pledge or otherwise encumber any shares of capital stock of the Company or any of its Subsidiaries;
(n) except for capital expenditures for items and in the amounts set forth in the capital budget included in Section 7.1(n) of the Company Disclosure Letter, make, authorize or enter into any commitment for any capital expenditures in excess of $100,000 in the aggregate;
(o) other than in the ordinary course of business consistent with past practice, (iiii) incur modify, amend or terminate or waive any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of rights under any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)Material Contract, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided new agreement that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have been a Company Material Adverse EffectContract if it were entered into at or prior to the date hereof;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof enter into, renew, extend, amend, grant a waiver under or terminate (other than terminations in accordance with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or their terms) any Company Subsidiary after Affiliate Transaction or transaction that would be a Company Affiliate Transaction if such transaction occurred prior to the date hereof;
(q) The Company shall notadopt or implement a plan of complete or partial liquidation, nor shall dissolution, restructuring, recapitalization or other reorganization of the Company permit or any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Codeits Subsidiaries;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire acquire, directly or indirectly, any of the capital stock of Parent or securities convertible or exchangeable into or exercisable for any shares of capital stock of Parent;
(s) subject to Section 7.3, take any action that would, or would reasonably be expected to, (i) result in any condition in Article VIII not being satisfied, (ii) prevent, materially delay or materially impede the Company consummation of the Merger or the other transactions contemplated by this Agreement or (iii) cause any Company Subsidiaryrepresentation in the applicable form of representation certificate contemplated by Section 8.2(d) hereof to be untrue as of the Closing; and
or (t) Neither the Company nor any Company Subsidiary shall agree, in writing agree or otherwise, commit to take do any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as Pending the Merger. Prior to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent or Acquisition Corp. shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure ScheduleAgreement:
(ai) The the business of the Company shall, and shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itcourse;
(bii) Except as contemplated by this Agreement, the Company shall notnot (A) directly or indirectly redeem, and shall not permit purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (B) amend its Certificate of Incorporation or By-laws except to effectuate the transactions contemplated in the Disclosures or (C) split, combine or reclassify the outstanding Company Subsidiary toStock or declare, make set aside or propose to pay any dividend payable in cash, stock or property or make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in distribution with respect to any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringsuch stock;
(ciii) The the Company shall not make (A) issue or agree to issue any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesadditional shares of, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, warrants or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into Company Stock, except to issue shares of Company Stock in connection with any capital stock matter relating to the Disclosures (B) acquire or dispose of any fixed assets or acquire or dispose of any other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) substantial assets other than in the ordinary course of business consistent with past practice, business; (C) incur additional Indebtedness or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, liabilities or enter into any contract relating to other transaction other than in the borrowing ordinary course of money bybusiness; (D) enter into any contract, its directorsagreement, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement commitment or arrangement with respect to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, the foregoing; or (viiE) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or except as contemplated by this Agreement, enter intointo any contract, adopt agreement, commitment or increase any indemnification arrangement to dissolve, merge, consolidate or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or enter into any other Personmaterial business combination;
(giv) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for use its best efforts to preserve intact the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition organization of the Company, any Company Subsidiaryto keep available the service of its present officers and key employees, or and to preserve the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case good will of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance those having business relationships with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportit;
(jv) The the Company agrees that it shall will not, nor shall will it authorize any director or authorize or permit any Company Subsidiary officer or employee or any attorney, accountant or other representative retained by it to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary coursemake, consistent solicit, encourage any inquiries with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary respect to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim engage in any actionnegotiations concerning, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling Acquisition Proposal (as defined below). The Company will promptly advise Parent orally and in writing of any such inquiries or proposals (or requests for information) and the substance thereof. As used in this paragraph, settlement “Acquisition Proposal” shall mean any proposal for a merger or compromise other business combination involving the Company or for the acquisition of a substantial equity interest in it or any material assets of it other than as contemplated by this Agreement. The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiaryforegoing; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Conduct of Business by the Company. The (a) From and after the date hereof until the earlier of the Effective Times or the date, if any, on which this Agreement is terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) with the prior written consent of Hyde Park (which consent should not be unreasonably conditioned, delayed or withheld) or (iii) as may be expressly contemplated or required by this Agreement, the Company covenants and agrees as to itself and that the business of the Company and its Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only conducted in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its their present business organization lines of business, maintain their rights, franchises and Company Permits and preserve their relationships with customers and suppliers; provided, however, that no action by the Company or its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings Subsidiaries with it;respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except The Company agrees with Hyde Park, on behalf of itself and its Subsidiaries, that from the date hereof and prior to the earlier of the Effective Times and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company or any of its Subsidiaries, (ii) as may be consented to by Hyde Park (which consent should not be unreasonably conditioned, delayed or withheld), (iii) as may be expressly contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(b) of the Company Disclosure Letter, the Company:
(i) shall not adopt any amendments to the Company Organizational Documents or the organizational documents of any Subsidiary;
(ii) shall not, and shall not permit any of its Subsidiaries to, issue, sell, or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase, or otherwise) any membership interests of any class or any other securities or equity equivalents or interests in the Company or any of its Subsidiaries or any phantom interest for which the value is derived therefrom;
(iii) shall not, and shall not permit any of its Subsidiaries that is not wholly owned by the Company to, authorize or make any distribution with respect to its members (whether in cash, assets, membership interests or other securities of the Company or its Subsidiaries);
(iv) shall not, and shall not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, or take any action with respect to any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the SME Merger;
(v) shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person, business or assets or make any loans, advances or capital contributions to, or investments in, any other person with a value in excess of $1 million in the aggregate, except (1) as contemplated by the Company’s five-year plan previously provided to Hyde Park (the “Company Five-Year Plan”) or (2) as made in connection with any transaction among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries; provided, however, that the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make any acquisition of any other person, business or propose assets or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to make prevent, materially impede or materially delay the consummation of the SME Merger;
(vi) shall not, and shall not permit any change of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, or otherwise dispose of or encumber any properties or non-cash assets with a value in its dividend practices excess of $1 million in the aggregate, except (1) sales, transfers and dispositions of obsolete or policies worthless equipment, (2) sales, transfers and dispositions of inventory, commodities and produced Hydrocarbons, crude oil and refined products in the ordinary course of business, (3) sales, leases, transfers or other dispositions made in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in connection with any material respect; and transaction among the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (excluding investment transactions 4) as required by Contracts or other arrangements existing on the date hereof and set forth on Section 3.20 of the Company Disclosure Letter, (5) the plugging and abandonment of Wxxxx in the ordinary course of business consistent with past practice, but including transactions involving and (6) the securitization of Assets of the Company or expiration of any Company Subsidiary Oil and transactions involving derivative securitiesNatural Gas Lease in accordance with its terms (other than as a result of failure to pay rental, shut-in royalties or similar lease maintenance payments), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(cvii) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur authorize any individual Liability or series of related Liabilities capital expenditures in excess of $200,000 1 million in the aggregate, except for (1) expenditures contemplated by the Company Five-Year Plan (whether or not such capital expenditure is made during the 2013 or 2014 fiscal year), or (2) expenditures made in response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or otherwise;
(viii) shall not, and shall not permit any of its Subsidiaries to, enter into any new contract to sell Hydrocarbons other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, ;
(ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) except in the ordinary course of business consistent with past practice, or (z) as required by applicable Law or the terms of agreements this Agreement or plans already any Company Benefit Plan or other Contract in effect or Applicable Lawexistence as of the date hereof, the Company shall not, and shall not permit any Company Subsidiary to of its Subsidiaries to, (i1) adopt or implementestablish, adopt, amend, modify, or commit terminate any Collective Bargaining Agreement or other Company Benefit Plan (other than amendments or modifications that do not materially increase the cost or expense to adopt the Company of providing or implementadministering such benefits), or (2) increase the compensation, severance or benefits of any of the current or former directors, managers, or officers of the Company or its Subsidiaries;
(x) shall not, and shall not permit any of its Subsidiaries to, materially amendchange financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(xi) shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any collective bargainingCompany Membership Interests, compensationownership interests of any Subsidiary of the Company or any securities convertible into or exchangeable for any such shares or ownership interest, employmentor any rights, consultingwarrants or options to acquire any such Company Membership Interests or ownership interests or take any action to cause to be exercisable any otherwise unexercisable award under any existing Company Benefit Plans (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable or unexercised awards or warrants outstanding on the date hereof), pensionother than for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries;
(xii) shall not, profit sharingand shall not permit any of its Subsidiaries to, bonusincur, incentiveassume, group insuranceguarantee or otherwise become liable for any indebtedness for borrowed money or any guarantee of such indebtedness, termination, retirement or other employee benefit contract, plan or policyexcept (1) for any indebtedness incurred in the ordinary course of business, (ii2) enter into for any indebtedness among the Company and its wholly owned Subsidiaries or materially amend any severance contractamong the Company’s wholly owned Subsidiaries, (iii3) increase for any indebtedness incurred to replace, renew, extend, refinance or refund any existing indebtedness on substantially the same or more favorable terms to the Company than such existing indebtedness, (4) for any guarantees by the Company of indebtedness of Subsidiaries of the Company or guarantees by the Company’s Subsidiaries of indebtedness of the Company or any Subsidiary of the Company, which indebtedness is incurred in compliance with this Section 5.1(b) and (5) incremental indebtedness not to exceed $10 million to the extent available to the Company under its existing credit facilities; provided, however, that in the case of each of clauses (1) through (5) such indebtedness does not impose or result in any manner additional restrictions or limitations that would be material to the compensation ofCompany and its Subsidiaries, or, following the Closing, Parent and its Subsidiaries, other than any obligation to make payments on such indebtedness and other than any restrictions or limitations to which the Company or any Subsidiary is currently subject under the terms of any indebtedness outstanding as of the date hereof;
(xiii) other than in the ordinary course of business, shall not, and shall not permit any of its Subsidiaries to, modify, amend or terminate, or waive any rights under any Company Material Contract or under any Company Permit, or enter into any new contract relating to the borrowing of money by, its directors, officers which would be a Company Material Contract or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject which would reasonably be expected to, after the Effective Times, restrict or limit in any labor organization material respect Parent, the Company, the Surviving Companies or any other Person as a collective bargaining representative of one their respective affiliates from engaging in any business or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase competing in any indemnification or hold harmless arrangements geographic location with any directorsperson;
(xiv) shall not, officers or other employees or agents of such party or and shall not permit any of its Subsidiaries to, pay, discharge, or satisfy any claims, liabilities, or obligations (whether accrued, absolute, contingent, unliquidated, or otherwise, and whether asserted or unasserted) in excess of $1 million, other Person;
(g) Other than the payment, discharge, or satisfaction in the ordinary course of business consistent with past practice;
(xv) shall not make, change or revoke any material Tax election, change any material tax accounting method, file any amended Tax return, enter into any closing agreement, request any Tax ruling, settle or compromise any material Tax proceeding, surrender any claim for a material refund of Taxes or take any action, other than in the ordinary course of business, that would have a material Tax effect;
(xvi) except as otherwise permitted by this Agreement, any refinancing permitted by clause (xii)(3) and (4) above or for transactions between the Company and its Subsidiaries or among the Company’s Subsidiaries, shall not, and shall not permit any Company Subsidiary toof its Subsidiaries, make to prepay, redeem, repurchase, defease, cancel or otherwise acquire any capital expenditures indebtedness or expenditures or commitments for expenditures for the purchase or lease guarantees thereof of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partySubsidiary, other than (1) at stated maturity and (2) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to which holders of such indebtedness or guarantees thereof may be entitled), in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof;
(hxvii) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive enter into any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;Affiliate Transactions; and
(ixviii) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the foregoing actions that are prohibited by the foregoing pursuant to clauses (ai) through (sxix) of this Section 5.1(b).
Appears in 1 contract
Conduct of Business by the Company. Pending the Closing. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to except as set forth in Schedule 4.1, during the period from the date of this Agreement and including continuing until the Effective Timeearlier of the termination of this Agreement or the Closing, unless Parent shall the Investors otherwise consent agree in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of the Subsidiaries to, (i) conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall consistent with past practice; (ii) use all reasonable best efforts to preserve intact its present business organization and preserve its regular services to, and maintain its assets and properties and its relationships withwith its customers, policyholderssuppliers, insurersadvertisers, reinsurersdistributors, agents, sales officers and distribution organizations, underwriters, investment customers, brokers, suppliers employees and other Persons with which it has significant business relationships; (iii) use reasonable best efforts to maintain all others having business dealings with it;
(b) Except as contemplated by this Agreement, of the Company shall not, and shall not permit any Company Subsidiary to, make material assets it owns or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions uses in the ordinary course of business consistent with past practice, but including transactions involving ; (iv) use reasonable best efforts to preserve the securitization goodwill and ongoing operations of Assets of the Company or of any Company Subsidiary its business; (v) maintain its books and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than records in the usual, regular and ordinary course of business manner, on a basis consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company ; and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company comply in all material respects with applicable Laws. Except as expressly contemplated by this Agreement or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in on Schedule 4.1, between the Company Disclosure Schedule, (y) in date of this Agreement and the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable LawClosing, the Company shall not, and shall cause each of the Subsidiaries not permit to, do any Company Subsidiary to of the following without the prior written consent of the Investors:
(a) (i) adopt or implement, or commit to adopt or implement, or materially amend, issue any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policydebt securities, (ii) enter into or materially amend incur any severance contractadditional indebtedness (other than borrowings under the Credit Facility referred to in the 2000 10-K, in accordance with the terms thereof), (iii) increase in any manner the compensation ofassume, grant, guarantee or endorse, or enter into make any contract relating to other accommodation or arrangement making the borrowing of money byCompany or any Subsidiary responsible for, its directors, officers any liabilities or other employees, except pursuant to the terms obligations of agreements any other Person or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employeesmake any loans, (v) pay advances or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognizecapital contributions to, or involuntarily become subject toinvestments in, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(gb) Other change any method of accounting or accounting practice used by the Company or any Subsidiary, other than such changes required by GAAP;
(c) repurchase, redeem or otherwise acquire or exchange any share of Common Stock or other equity interests other than in accordance with the terms of the Existing Preferred Stock and Class B Common Stock; except for issuances of Class A Common Stock pursuant to the exercise of options to purchase Class A Common Stock outstanding on the date hereof and listed on Schedule 2.3 or options issued in compliance with this clause (c), issue or sell any additional shares of the capital stock of, or other equity interests in, the Company or any Subsidiary, or securities convertible into or exchangeable for such shares or other equity interests, or issue or grant any subscription rights, options, warrants or other rights of any character relating to shares of such capital stock, such other equity interests or such securities, other than options to purchase Class A Common Stock granted after the date hereof in the ordinary course of business consistent with past practice, under the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000Company's existing stock option plans; or, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures dividends required to be made pursuant to existing contracts to which paid on the Company Existing Preferred Stock, declare, set aside, make or pay any Company Subsidiary is a partydividend, or make any distribution, in respect of any shares of capital stock of the Company;
(hd) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
amend (i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company's Certificate of Incorporation, any Company Subsidiary, by-laws or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 other organizational documents or (ii) restructureany Subsidiary's charter, amend, modify by-laws or otherwise affect any Investment Asset or any contract relating thereto which is material other organizational documents except with respect to the financial condition adoption and filing of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement Amended Certificates of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportDesignation;
(je) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, action that is reasonably likely to result in (i) any of the realization representations and warranties set forth in Article II becoming false or inaccurate in any material respect as of any gross capital loss or losses in an amount of $250,000 or more the Closing Date or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock conditions to the obligations of the Company or any Company SubsidiaryInvestors set forth in Section 5.2 not being satisfied; andor
(tf) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the actions prohibited restricted by the foregoing clauses (a) through (s)this Section 4.1.
Appears in 1 contract
Samples: Stock Purchase Agreement (Forstmann Little & Co Sub Debt & Eq MGMT Buyout Par Vii Lp)
Conduct of Business by the Company. The (a) Except as required or ---------------------------------- permitted by this Agreement or as disclosed in Section 4.1 of the Company covenants and Disclosure Letter, during the period from the date of this Agreement until the Effective Time, the Company agrees as to itself and its Subsidiaries that (except to the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent extent that Purchaser shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary its Subsidiaries shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions conduct their respective operations in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets and each of the Company and its Subsidiaries will use its reasonable efforts to preserve intact its present business organization, to keep available the services of its present officers and employees and to maintain satisfactory relationships with licensors, licensees, suppliers, contractors, distributors, customers and others having business relationships with it and to maintain insurance on the same terms as are in effect on the date of this Agreement. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Effective Time, neither the Company nor any of its Subsidiaries shall, without the prior written consent of Purchaser (which consent will be given or of denied within a reasonable time after any Company Subsidiary request for such consent and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall will not make any material change in accounting methods or practices, including without limitation any change be unreasonably withheld with respect to establishment of reserves for unearned premiumsthe matters described in paragraph (v), losses (including without limitation incurred but not reported lossesvi), (x) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;(xii) below):
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its Articles of Organization or other charter document or by-laws (unless contemplated hereby), Bylaws;
(ii) authorize for issuance, issue, sell, deliver, pledge or agree or commit to issue, sell, deliver or pledge (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any capital stock of any class or any debt or other securities convertible into capital stock or equivalents (including, without limitation, stock appreciation rights), or amend any of the terms of any of the foregoing, other than the issuance of shares of capital stock upon the exercise of outstanding options or rights under the Identified Equity Plans;
(iii) (A) split, combine or reclassify any shares of its capital stock, or authorize or propose the issuance or authorization of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, adopt or approve any Rights Plan, or repurchase, redeem or otherwise acquire any of its securities or any securities of its Subsidiaries, or (B) make any payment of cash or other property to terminate, cancel or otherwise settle any outstanding Options or any rights under the ESPP, other than in the case of clauses (A) or (B) above for the issuance of Shares in connection with the exercise of options or rights under the Identified Equity Plans or the repurchase of Shares to the extent contractually required pursuant to the terms of existing employee stock repurchase agreements;
(iv) (A) incur or assume any individual Liability short-term or series long-term Indebtedness, other than up to $1,000,000 under the Company's existing credit line with BankBoston, N.A. (or any successor line of related Liabilities credit) or grant, extend or increase the amount of a mortgage lien on any leasehold or fee simple interest of the Company or its Subsidiaries; or, except in the ordinary course of business consistent with past practice in the case of clauses (B) through (E) below, (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except for obligations of the Company or any Subsidiary of the Company; (C) make any loans, advances or capital contributions to, or investments in, any other Person; (D) pledge or otherwise encumber shares of capital stock of the Company or any of its Subsidiaries; or (E) mortgage or pledge any of its assets, tangible or intangible, or create or suffer to exist any lien thereon except as existing on the date of this Agreement or as may be required under agreements outstanding on the date of this Agreement to which the Company or any of its Subsidiaries are parties;
(v) except as expressly provided in this Agreement, enter into, adopt or amend in any manner or terminate any bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase agreement, pension, retirement, deferred compensation, employment, severance, change-in-control or other employee benefit agreement, trust, plan, fund or other arrangement for the benefit or welfare of any director, officer or employee, or increase in any manner the compensation (including bonuses) or fringe benefits of any director, officer or employee or pay any benefit not required by any plan or arrangement as in effect as of the date of this Agreement or enter into any contract, agreement, commitment or arrangement to do any of the foregoing;
(vi) sell, lease, license, pledge or otherwise dispose of or encumber any material assets except in the ordinary course of business consistent with past practice (including without limitation any indebtedness owed to it or any claims held by it);
(vii) except as otherwise permitted pursuant to Section 4.5, acquire or agree to acquire any business or any corporation, partnership, limited liability company, association or other business organization or division thereof, whether by merger or consolidation or by purchasing capital stock or assets, or by any other manner;
(viii) change any of the accounting principles or practices used by it affecting its assets, liabilities or business, except for such changes required by a change in generally accepted accounting principles;
(ix) pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, fixed, contingent, liquidated, unliquidated or otherwise), other than the payment, discharge or satisfaction of liabilities (A) in the ordinary course of business consistent with past practices, (B) with notice to Purchaser, in an amount which does not exceed $50,000 in the aggregate, (C) incurred pursuant to the terms of the Xxxxxx Engagement Letter up to but not exceeding $400,000 (including any payments made prior to the date of this Agreement) plus reimbursement of out-of-pocket expenses, and (D) incurred in connection with the transactions contemplated hereby, including any costs for legal and accounting professionals, but only if they are calculated on a time and disbursements basis at standard rates and itemized in reasonable detail;
(x) without prior consultation with the Parent (in addition to the consent requirement described above) commence any litigation or arbitration other than in accordance with past practice or settle any litigation or arbitration for money damages or other relief in excess of $200,000 50,000 or if as part of such settlement the Company or any Subsidiary would agree to any restrictions on its operations;
(xi) grant any license with respect to or otherwise convey any intellectual property rights, other than in the ordinary course of business consistent with past practice, ;
(iiixii) incur elect or appoint any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days new directors or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability officers of the Company or any Subsidiary;
(xiii) waive, release or amend its rights under any confidentiality, "standstill" or similar agreement that the Company entered into in connection with its consideration of a potential strategic transaction; provided, however, that the ----------------- Company may waive, release or amend its rights under any Company Subsidiary to engage in any businesssuch confidentiality, to compete with any Person"standstill" or similar agreement if the Company's Board determines, based on the advice of independent legal counsel, that failure to do business with any Person or in any location or so would be reasonably likely to employ any Person, (vii) enter into any contract relating constitute a breach of its fiduciary duties to the direct Company's stockholders under applicable law; or
(xiv) take, or indirect guarantee agree in writing or otherwise to take, any of the actions described in Sections 4.1(i) through 4.1(xiii).
(b) In the event that the Company wishes to negotiate potential strategic alliances or e-commerce partnering arrangements ("Strategic --------- Relationships"), the Company will notify the Parent prior to furnishing any obligation of non- ------------- public information to any Person in respect connection with any potential Strategic Relationship and prior to any negotiations regarding a Strategic Relationship, and will permit the Parent and its representatives to participate in any such negotiations. Subject to compliance with the preceding sentence the Company will be permitted to discuss in these negotiations the possibility of indebtedness for borrowed money partner(s) in Strategic Relationships making investments in the Company in an amount not to exceed $2,000,000. Before the Company enters into, or makes any binding agreement to enter into, any Strategic Relationship it will obtain the prior written consent of the Parent if such Strategic Relationship would include the issuance of shares of capital stock or options, warrants or other financial obligation rights to acquire capital stock, would impose any non-competition, exclusive dealing or other restrictions on the operation of any Person other than in the Company's business or would otherwise be outside the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as During the period from the date of this Agreement to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless except as otherwise contemplated by this Agreement or to the extent that Parent shall otherwise consent in writingwriting (which consent, to the extent it pertains to any action, activity, event or occurrence that is consistent with long term cash preservation, taking into account Parent's expectations of realizable cash following the integration of Parent and the Company, shall not be unreasonably withheld), the Company shall and shall cause each of the Company Subsidiaries to carry on their respective businesses in the usual, regular and ordinary course, consistent with past practice. Following a written request by the Company to Parent to provide consent pursuant to this Section 7.2, Parent agrees to provide the Company with a response within a reasonably practicable time. Except as expressly permitted by this Agreement, as or in Section 7.2 of the Company Disclosure Schedule or to the extent that Parent shall otherwise consent in writing (which consent shall not be unreasonably withheldwithheld assuming it meets the same standards required for consent in the parenthetical in the immediately preceding sentence), or as otherwise expressly permitted or contemplated by this Agreement or as set forth on neither the Company Disclosure Schedulenor any of the Company Subsidiaries shall:
(ai) The Company shallsplit, and shall cause each combine or reclassify or redeem, purchase or otherwise acquire any shares of its capital stock or other securities or declare, set aside or pay any dividend or other distribution (whether in cash, stock, or property or any combination thereof) in respect of any shares of its capital stock or other securities, except for dividends paid by any Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and to the Company and each or any Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services tothat is, and maintain its relationships withdirectly or indirectly, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itwholly owned by the Company;
(bii) Except as contemplated by authorize for issuance, issue or sell or agree or commit to issue or sell (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities or equity equivalents (including, without limitation, stock appreciation rights) (other than the issuance of shares of Company Common Stock upon the exercise of Company Options outstanding on the date of this AgreementAgreement in accordance with their present terms);
(iii) authorize, the Company shall not, and shall not permit any Company Subsidiary to, make commit to or propose to make any change in its dividend practices equipment purchases or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions capital expenditures other than in the ordinary course of business and consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary practice and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities an aggregate amount in excess of $200,000 10,000;
(iv) (A) acquire, sell, lease, license, encumber, transfer or dispose of any assets outside the ordinary course of business (whether by asset acquisition, stock acquisition or otherwise), except pursuant to obligations in effect on the date hereof as set forth in Section 7.2(iv) of the Company Disclosure Schedule, or (B) enter into, modify or amend any agreement or other arrangement related to the licensing of assets by or to the Company or any Company Subsidiary;
(v) incur any amount of indebtedness for borrowed money, guarantee any indebtedness, issue or sell debt securities, make any loans, advances or capital contributions, mortgage, pledge or otherwise encumber any material assets, or create or suffer any material lien thereupon;
(vi) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than any payment, discharge or satisfaction (A) in the ordinary course of business consistent with past practice, (iiiB) incur any indebtedness for money borrowed in connection with the Transactions which is not an aggregate for the Company and the Company Subsidiaries amount in excess of $200,000 for 5,000;
(vii) change any of the accounting principles or practices used by it (except as required by GAAP, in which case written notice shall be provided to Parent and MergerCo prior to any such indebtedness having change);
(viii) with respect to Taxes in an aggregate amount greater than $10,000 of or affecting the Company or any Company Subsidiary, make, change or revoke any election, change any accounting period, adopt or change any accounting method, file any amended Tax return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any Company Subsidiary, surrender any right to claim a maturity refund of 90 days Taxes, consent to any extension or less waiver of the limitation period applicable to any Tax claim or $200,000 for assessment, fail to timely file any Tax return, take a position on a Tax return not in keeping with prior practice or take or omit to take any other action, if such indebtedness having a maturity election, adoption, change, amendment, agreement, settlement, surrender, consent or other action or omission is outside the ordinary course of more than 90 daysbusiness or could have the effect of increasing the present or future Tax liability or decreasing any present or future Tax asset of the Company or any Company Subsidiary;
(ix) except as required by law and except pursuant to employee retention agreements entered into with such employees upon such terms and with such compensation amounts as approved by both the Company and Parent ("Stay Bonus Agreements"), (ivA) agree enter into, adopt, amend or increase benefits under any Employee Program, (B) enter into, adopt, amend or renew any agreement, arrangement, plan or policy between the Company or any of the Company Subsidiaries and one or more of their respective directors, officers, employees, agents or consultants, (C) increase in any manner the compensation or fringe benefits of any director, officer, employee, agent or consultant or (D) pay any benefit not required by any Employee Program or arrangement as in effect on the date hereof;
(x) adopt any amendments to the Certificate of Incorporation or the Bylaws or any of the organizational documents of the Company or the Company Subsidiaries, except as expressly provided by the terms of this Agreement;
(xi) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, merger, consolidation, demutualizationrestructuring, acquisitionrecapitalization or reorganization;
(xii) settle or compromise any pending or threatened litigation related to the Transactions or settle or compromise any in excess of $15,000 in the aggregate other litigation (whether or not commenced prior to the date of this Agreement);
(xiii) amend any term of any outstanding security of the Company or any Company Subsidiary;
(xiv) enter into, redomesticationmodify or amend any Material Contract or waive, sale delay the exercise of, release or assign any rights or claims under any Material Contract or otherwise subject the Company or any Company Subsidiary to any material commitment, obligation or liability;
(xv) enter into any agreement or other arrangement that is material to the business of all the Company or any Company Subsidiary or which requires the Company or any Company Subsidiary to pay in excess of $10,000;
(xvi) license, assign or otherwise transfer to any person or entity any rights to the Intellectual Property Assets (except as pursuant to the terms of Material Contracts in effect as of the date hereof) or fail to maintain or enforce any of the Intellectual Property Assets;
(xvii) permit any insurance policy naming the Company or any Company Subsidiary as a beneficiary or a substantial portion loss payable payee to be canceled or terminated without 55 obtaining a replacement insurance policy in a comparable amount and against comparable risks and losses;
(xviii) enter into any oral or written agreement or arrangement with any customer or distributor related to the offering of its Assetsdiscounts, bulk extended warranties, service contracts, bundling of any products, rights of return or assumption reinsurance arrangement any other agreements or other similar reorganization, arrangement or business combinationarrangements, other than agreements or arrangements (A) with a Superior Acquisition Proposal as permitted hereinterm of less than ninety (90) days, (vB) prior to notifying Parent, enter entered into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practicespractices and (C) recorded in accordance with GAAP;
(xix) amend or restate any of the Company SEC Reports or any financial statements contained therein, except to the extent advised by the Company's legal or accounting advisors that such amendment or restatement is required;
(vixx) take or agree to take any action which would make any of the representations and warranties of the Company contained in this Agreement untrue or incorrect as of the date when made in any material respect if such action had then been taken; or
(xxi) enter into any contract limiting the ability of the Company agreement, contract, commitment or of any Company Subsidiary to engage in any business, to compete arrangement with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)to, or (x) modify any contract with respect authorize, recommend, propose or announce an intention to the subject of do, any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etcforegoing.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Samples: Merger Agreement (Plug Power Inc)
Conduct of Business by the Company. Pending the Merger.
(a) The Company covenants and agrees as to itself that between the date of this Agreement and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing (and except as set forth in Section 5.1 of the Company Disclosure Letter or as otherwise expressly contemplated, permitted or contemplated required by this Agreement), the Company shall and shall cause each of its Subsidiaries 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 its business and operations only in the ordinary and usual course of business and in a manner consistent with prior practice, and (iii) use commercially reasonable efforts to (A) preserve intact its assets, properties, contracts or other legally binding understandings, licenses and business organizations, (B) keep available the services of its current officers and key employees and (C) to preserve the current relationships of the Company and its Subsidiaries with customers, suppliers, distributors, lessors, licensors, licensees, creditors, employees, contractors and other Persons with which the Company or any of its Subsidiaries has business relations.
(b) Without limiting the foregoing, the Company covenants and agrees that between the date of this Agreement and the Effective Time, the Company shall not and shall cause each of its Subsidiaries not to (except as expressly contemplated, permitted or required by this Agreement, as set forth on the Company Disclosure Schedule:
(aapplicable subsection of Schedule 5.1(b) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company Disclosure Letter or with the prior written approval of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, Parent): (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside aside, make or pay any dividends or other distributions (whether in cash, stock or property) in respect of any of its capital stock; (ii) adjust, split, combine or reclassify any of its capital stock or that of its Subsidiaries or issue or authorize or propose the Company 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, 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); (iv) issue, deliver or redeemsell, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).pledge or
Appears in 1 contract
Conduct of Business by the Company. Pending the Merger. The Company covenants Stockholders covenant and agrees as to itself and the Company Subsidiaries agree that, at all times up to and including from the Effective Timedate of this Agreement until the Closing Date, unless Parent Group 1 shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure ScheduleAgreement:
(a) The business of the Company shall, and shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit take any Company Subsidiary toaction except in, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business and consistent with past practice. In connection therewith, the parties agree that the Company may dealer trade vehicles for similar models, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make liquidate or otherwise dispose of any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 their new vehicles other than in the ordinary course of business consistent to retail buyers. The Company agrees to maintain their advertising expenditures and activities commensurate with past practiceprior business practices. The Company shall not advertise a "Going Out of Business" sale;
(b) The Company shall not directly or indirectly do any of the following: (i) issue, sell, pledge, dispose of or encumber, (iiiA) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days capital stock (or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (ivsecurities convertible into capital stock) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (viiB) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shallpractice and not relating to the borrowing of money, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf any assets of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to TaxesCompany, (ii) make a request for a tax ruling amend or enter into a Tax Ruling propose to amend the articles of incorporation or bylaws (or other organizational documents) of the Company, (iii) split, combine or reclassify any outstanding capital stock of the Company, or declare, set aside or pay any dividend payable in cash, stock, property or otherwise with respect to its capital stock whether now or hereafter outstanding (except as defined provided in Section 6.3(j) below), settlement (iv) redeem, purchase or compromise acquire or offer to acquire any of its capital stock, (v) create, incur, assume, guarantee or otherwise become liable or obligated with respect to any material Tax matterindebtedness for borrowed money (other than floor plan indebtedness incurred in the ordinary course of business), or (iiivi) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither enter into any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Section 6.3(b);
(c) The Company shall use its best efforts (i) to preserve intact the business organization of the Company, (ii) to maintain in effect any franchises, authorizations or similar rights of the Company, (iii) to keep available the services of its current officers and key employees, (iv) to preserve the goodwill of those having business relationships with it, (v) to maintain and keep its properties in as good a repair and condition as presently exists, except for deterioration due to ordinary wear and tear, (vi) to maintain in full force and effect insurance comparable in amount and scope of coverage to that currently maintained by it, (vii) to collect its accounts receivable, (viii) to preserve in full force and effect all leases, operating agreements, easements, rights-of-way, permits, licenses, contracts and other agreements which relate to its assets (other than those expiring by their terms), and (ix) to perform or cause to be performed all of its obligations in or under any of such leases, agreements and contracts.
(d) The Company shall not make or agree to make any single capital expenditure or enter into any purchase commitments in excess of $50,000;
(e) The Company shall perform its obligations under any contracts and agreements to which it is a party or to which its assets are subject, except for such obligations as the Company nor any in good faith may dispute;
(f) The Company Subsidiary shall declarenot increase the salary, set aside or pay any dividends or distributions (whether in cashbenefits, stock options, bonus or property) in respect other compensation of any capital stock officer, director or employee of the Company other than consistent with past business practices of the Company; and shall not grant, to any individual, severance or termination pay that exceeds the lesser of (i) such individual's compensation for the calendar month immediately preceding such individual's grant of severance or termination pay, or (ii) $50,000;
(g) The Company shall not take any Company Subsidiary action that would, or redeemthat reasonably could be expected to, purchase or otherwise acquire result in any of the capital stock representations and warranties set forth in this Agreement becoming untrue or any of the conditions to the Merger set forth in Article VIII not being satisfied;
(h) The Company shall not (i) amend or terminate any Plan or Benefit Program or Agreement except as may be required by applicable law, (ii) increase or accelerate the payment or vesting of the amounts payable under any Plan or Benefit Program or Agreement, or (iii) adopt or enter into any personnel policy, stock option plan, collective bargaining agreement, bonus plan or arrangement, incentive award plan or arrangement, vacation policy, severance pay plan, policy or agreement, deferred compensation agreement or arrangement, executive compensation or supplemental income arrangement, consulting agreement, employment agreement or any other employee benefit plan, agreement, arrangement, program, practice or understanding (other than the Plans and the Benefit Programs or Agreements);
(i) The Company Subsidiaryshall not enter into any agreement or incur any obligation, the terms of which would be violated by the consummation of the transactions contemplated by this Agreement; and
(tj) Neither Notwithstanding anything in this Agreement to the contrary, dividends or other form of distribution to the Stockholders may be made after the date of the Interim Balance Sheet so long as such distributions do not cause the Company nor to be in violation of any Company Subsidiary shall agree, in writing manufacturer working capital or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)equity guidelines or requirements.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Group 1 Automotive Inc)
Conduct of Business by the Company. Pending the Closing. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to between the date of this Agreement and including the Effective Time, except as set forth in Section 5.01 of the Disclosure Schedule or as contemplated by any other provision of this Agreement, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheldwithheld or delayed, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on (1) the businesses of the Company Disclosure Schedule:
(a) The and the Company shall, and Subsidiaries shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each the Company Subsidiary Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (2) the Company shall use all its reasonable best efforts to keep available the services of such of the current officers, significant employees and consultants of the Company and the Company Subsidiaries and to preserve intact its present business organization the current relationships of the Company and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment the Company Subsidiaries with such of the customers, brokers, suppliers and all others having other persons with which the Company or any Company Subsidiary has significant business dealings with it;
(b) Except relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, except as set forth in Section 5.01 of the Disclosure Schedule or as contemplated by any other provision of this Agreement, the Company shall not, and shall not neither cause nor permit any Company Subsidiary Subsidiaries or any of the Company's affiliates (over which it exercises control), or any of its or their officers, directors, employees and agents (in each case, in their capacities as such) to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following, without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its charter or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, (i) any shares of capital stock of the Company agrees or any Company Subsidiary of any class, or securities convertible or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Company Subsidiary (except for the issuance of any shares of capital stock issuable pursuant to the exercise of any Company Options outstanding on the date of this Agreement); or (ii) any property or assets of the Company or any Company Subsidiary, except in all cases in the ordinary course of business and in a manner consistent with past practice; provided that it will notify Parent and provide Parent with information in reasonable detail regarding the aggregate amount of any material transactions such sale or disposition (excluding investment transactions other than a sale or disposition of petroleum products or other inventory in the ordinary course of business consistent with past practice, but including transactions involving as to which there shall be no restriction on the securitization aggregate amount), or pledge, grant, transfer, lease, license, guarantee or encumbrance of Assets such property or assets of the Company or of any Company Subsidiary shall not exceed (x) $500,000 or (y) in the case of any sale or disposition of retail gasoline sites, $1,000,000, provided that not more than four retail gasoline sites may be disposed of under this subsection (y) between the date of this Agreement and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringthe Effective Time;
(c) The Company shall not declare, set aside, make or pay any material change dividend or other distribution, payable in accounting methods cash, stock, property or practicesotherwise, including without limitation any change with respect to establishment any of reserves for unearned premiumsits capital stock, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than dividends paid by any of the wholly owned Company Subsidiaries to the Company in the ordinary course of business consistent with past practice;
(d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(iiii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 daysacquire (including, (iv) agree to any without limitation, by merger, consolidation, demutualizationor acquisition of stock or assets) any interest in any corporation, acquisitionpartnership, redomesticationother business organization, sale of all person or a substantial portion of its Assets, bulk any division thereof or assumption reinsurance arrangement or other similar reorganization, arrangement or business combinationany assets, other than a Superior Acquisition Proposal as permitted herein, (vx) prior to notifying Parent, enter into acquisitions of any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents assets in the ordinary course of business consistent with past practicespractice that are not, in the aggregate, in excess of $300,000 or (viy) enter into any contract limiting the ability purchases (whether for cash or pursuant to an exchange) of the Company crude oil or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person intermediate products for refining or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money refined petroleum products or other financial obligation of any Person other than inventory for resale in the ordinary course of business and consistent with past practice; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)guarantee or endorse, or (x) modify any contract with respect to otherwise as an accommodation become responsible for, the subject obligations of any of the foregoing clauses;
(e) The Company shall notperson for borrowed money, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) except for indebtedness for borrowed money incurred in the ordinary course of business and consistent with past practicepractice under the Loan and Security Agreement, or (z) effective as required by the terms of agreements or plans already in effect or Applicable LawDecember 10, 1998 and last amended effective as of March 16, 2000, between Congress Financial Corporation and First Union National Bank, as lenders, Congress Financial Corporation, as administrative agent, the Company and certain of the Company Subsidiaries, as borrowers, or incurred to refinance outstanding indebtedness for borrowed money existing on the date of this Agreement (which refinancing shall not, not increase the aggregate amount of indebtedness permitted to be outstanding thereunder and shall not permit include any covenants that shall be materially more burdensome to the Company Subsidiary in any material respect or increase costs to (i) adopt or implementthe Surviving Corporation after the Effective Time in any material respect), or commit to adopt or implementother indebtedness for borrowed money with a maturity of not more than one year in a principal amount not, or materially amendin the aggregate, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, in excess of $1,000,000; (iii) increase terminate, cancel or request any material change in, or agree to any material change in any manner the compensation of, Material Contract or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the business, results of operations or financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described other than in clauses the ordinary course of business, consistent with past practice; (iiv) and make or authorize any capital expenditure, other than as set forth in Section 5.01(e)(iv) of the Disclosure Schedule; or (iiv) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 5.01(e);
(f) increase the compensation payable or to become payable to its officers or employees, only except for increases in accordance with the statement past practices in salaries or wages of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets employees of the Company or any Company Subsidiary which took place since who are not officers of the last such report;
(j) The Company agrees that it shall notCompany, nor shall it permit or grant any Company Subsidiary rights to severance or termination pay to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract employment or amend severance agreement with, any director, officer or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock employee of the Company or any Company Subsidiary; and, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option (including, without limitation, the granting of stock options, stock appreciation rights, stock option appreciation unit awards, performance awards or performance restricted stock awards), stock purchase, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except as contemplated by this Agreement or to the extent required by applicable Law or the terms of a collective bargaining agreement or a contractual obligation existing on the date hereof;
(tg) Neither take any action with respect to modifying accounting policies or procedures, other than actions in the ordinary course of business, consistent with past practice or the requirements of U.S. GAAP and as advised by the Company's regular certified independent public accountants;
(h) waive, release, assign, settle or compromise any material claims or litigation involving money damages in excess of $250,000, except for claims asserted by the Company nor or the applicable Company Subsidiary;
(i) make any material Tax election or settle or compromise any material federal, state, local or foreign Tax liability;
(j) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing;
(k) amend or modify, or propose to amend or modify, the Rights Agreement, as amended as of the date hereof, except as contemplated in this Agreement;
(l) take any action that will be likely to result in the representations and warranties set forth in Article III becoming false or inaccurate in any material respect (or, with respect to any representation and warranty already qualified by materiality, false or inaccurate in any respect);
(m) enter into or carry out any other transaction other than in the ordinary and usual course of business or other than as permitted pursuant to the other clauses in this Section 5.01;
(n) take any action or fail to take any action that could reasonably be expected to have or result in a Material Adverse Effect; or
(o) permit or cause any Company Subsidiary shall agree, in writing or otherwise, to take do any of the actions prohibited by foregoing or agree or commit to do any of the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Samples: Merger Agreement (Crown Central Petroleum Corp /Md/)
Conduct of Business by the Company. The Company covenants and agrees as to itself and From the Company Subsidiaries that, at all times up to and including date hereof until the Effective Time, unless Parent shall otherwise consent agree in writing, or except as set forth on Schedule 5.01 of the Company Disclosure Letter, or as otherwise contemplated by this Agreement, the Company and the Company Subsidiaries shall conduct their business in the ordinary course consistent with past practice and shall use their reasonable best efforts to preserve intact their business organizations and relationships and goodwill with third parties and to keep available the services of their present officers and key employees, subject to the terms of this Agreement. Without limiting the foregoing and except as otherwise provided in this Agreement, from the date hereof until the Effective Time, without the prior written consent of Parent, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct will not adopt or propose any change in its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itRestated Certificate of Incorporation or By-Laws;
(b) Except as contemplated by this AgreementOther than the regular quarterly dividend payable on the Convertible Preferred Stock, the Company shall will not, and shall will not permit any Company Subsidiary to, make declare, set aside or propose pay any dividend or other distribution with respect to make any shares of capital stock of the Company, or contract for or effect any repurchase, redemption or other acquisition or investment by the Company or any Company Subsidiary of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any Company Subsidiary, or declare or effect any stock split, reclassification or other change in capital structure;
(c) The Company will not, and will not permit any Company Subsidiary to, enter into or consummate any joint venture, partnership, or other similar arrangement or form any other new arrangement for the conduct of its dividend practices business or policies acquire or in its underwritingenter into any agreement or letter of intent to merge or consolidate with any other person;
(d) The Company will not, pricingand will not permit any Company Subsidiary to, claimspurchase a material amount of assets or securities of any other person, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions except for asset purchases in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of practice or as described in the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringDisclosure Letter;
(ce) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall will not, and shall will not permit any Company Subsidiary to, (i) amend its charter sell, lease, license or by-laws (unless contemplated hereby)otherwise surrender, (ii) incur relinquish or dispose of any individual Liability assets or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for property which are material to the Company and the Company Subsidiaries in excess Subsidiaries, taken as a whole, except (x) pursuant to existing contracts or commitments (the terms of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree which have been disclosed to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) Parent prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined belowdate hereof), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice;
(f) The Company will not settle any material Audit, make or change any material Tax election or file amended Tax Returns;
(g) The Company will not issue or grant any securities or option or warrant to acquire any securities (except pursuant to existing obligations), enter into any amendment of any material term of any outstanding security of the Company or of any Company Subsidiary, incur any indebtedness, including notes payable or capital lease obligations, or guarantee obligations of others except pursuant to existing credit facilities or arrangements, fail to make any required contribution to any Company ERISA Plan, take any action to amend or terminate any Company Plan, increase compensation, bonus or other benefits payable to any employee or former employee, consultant or agent, adopt any other plan, program, arrangement or practice providing benefits for or compensation to or on behalf of its employees or former employees (z) except as required by applicable law), or enter into any settlement or consent with respect to any pending litigation, except in the terms ordinary course of agreements business consistent with past practice or plans already in effect as otherwise permitted by this Agreement;
(h) The Company will not change any method of accounting or Applicable Lawaccounting practice, or any practice relating to the maintenance of records, by the Company or any Company Subsidiary, except for any such required change by GAAP;
(i) The Company will not, and will not permit any Company Subsidiary to, agree or commit to do any of the foregoing; and
(j) except to the extent necessary to comply with the requirements of applicable laws and regulations, the Company shall will not, and shall will not permit any Company Subsidiary to (i) adopt take, or implement, agree or commit to adopt or implement, or materially amendtake, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend action that would make any severance contract, (iii) increase representation and warranty of the Company hereunder inaccurate in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreementrespect at, or as contemplated by this Agreement, enter into, adopt or increase of any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practicetime prior to, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 Effective Time or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiaryomit, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish agree or commit to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwiseomit, to take any of action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time, provided, however that the actions prohibited by Company shall be permitted to take or omit to take such action which can (without any uncertainty) be cured at or prior to the foregoing clauses (a) through (s)Effective Time.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees Except (i) as to itself and expressly set forth in the Company Subsidiaries thatDisclosure Letter; (ii) as expressly permitted, at all times up to and including contemplated or required by this Agreement; (iii) as required by applicable Law; or (iv) with the Effective Time, unless prior written consent of Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by delayed) from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
(a) The Effective Time, the Company shall, and shall cause each Company Subsidiary to, conduct its the business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and of the Company and each Company Subsidiary in the Ordinary Course of Business; provided, however, that no action or failure to take action with respect to matters specifically addressed by any of the provisions of the next sentence shall use all reasonable efforts constitute a breach under this sentence unless such action or failure to preserve intact its present business organization and preserve its regular services totake action would constitute a breach of such provision of the next sentence. In addition, and maintain its relationships withwithout limiting the generality of the foregoing, policyholdersexcept (i) as expressly set forth in the Company Disclosure Letter; (ii) as expressly permitted, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated or required by this AgreementAgreement or any Company Benefit Plan; (iii) as required by applicable Law; or (iv) with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed) from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make do any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;following:
(ca) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or propertyproperty or any combination thereof) in respect of, any of its capital stock, other equity interests or voting securities, other than dividends and distributions by a direct or indirect wholly owned Company Subsidiary to its parent; (ii) split, combine, subdivide or reclassify any of its capital stock, other equity interests or voting securities or securities convertible into or exchangeable or exercisable for capital stock or other equity interests or voting securities, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, other equity interests or voting securities, other than as permitted by Section 5.01(b); or (iii) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or exchangeable or exercisable for capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, except for acquisitions, or deemed acquisitions, of Company Common Stock or other equity securities of the Company in connection with (A) the payment of the exercise price of Company Stock Options with Company Common Stock (including in connection with “net exercises”), (B) required tax withholding in connection with the exercise, vesting and settlement of Company Stock Awards and other awards pursuant to the Company Stock Plans, and (C) forfeitures of Company Stock Awards;
(b) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien (other than Liens imposed by applicable securities Laws) (i) any shares of capital stock of the Company or any Company Subsidiary other than (A) the issuance of Company Common Stock upon the exercise, vesting or redeemsettlement of Company Stock Awards or other awards pursuant to the Company Stock Plans, purchase in each case outstanding at the close of business on the date of this Agreement and in accordance with their terms in effect at such time and (B) the issuance of Company Common Stock pursuant to the ESPP during the current offering period thereunder (the “Current Offering Period”); (ii) any other equity interests or otherwise voting securities of the Company or any Company Subsidiary; (iii) any securities convertible into or exchangeable or exercisable for capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary; (iv) any warrants, calls, options or other rights to acquire any capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary; (v) any rights issued by the Company or any Company Subsidiary that are linked in any way to the price of any class of Company Capital Stock or any shares of capital stock of any Company Subsidiary, the value of the Company, any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of the Company or any Company Subsidiary; and(vi) any stock-related, cash-based, performance or similar awards or bonuses or any other award that may be settled in Company Common Stock in which the value of the securities is linked directly or indirectly to the price or value of any Company Common Stock other than for new hires in the Ordinary Course of Business or (vii) any Company Voting Debt;
(tc) Neither (i) amend the Company nor Charter or the Company By-laws; or (ii) amend in any material respect the charter or organizational documents of any Company Subsidiary shall agreeSubsidiary, except, in writing the case of each of the foregoing clauses (i) and (ii), as may be required by Law or otherwisethe rules and regulations of the SEC or the NYSE;
(d) allow for the commencement of any new offering periods under the ESPP;
(e) make or adopt any change in its accounting methods, principles or practices, except insofar as may be required by a change in GAAP or Law;
(f) directly or indirectly acquire or agree to acquire in any transaction any equity interest in any Person or business or division thereof or any properties or assets, in each case with an aggregate purchase price in excess of $10,000,000 in any transaction or series of related transactions or $25,000,000 in the aggregate, except (i) acquisitions in the Ordinary Course of Business or as contemplated in the Capital Expenditures Plan; (ii) acquisitions pursuant to Contracts in existence on the date of this Agreement; or (iii) acquisitions with respect to transactions between the Company, on the one hand, and any wholly owned Company Subsidiary, on the other hand, or between wholly owned Company Subsidiaries;
(g) except in relation to Liens to secure Indebtedness for borrowed money permitted to be incurred under Section 5.01(i), sell, lease (as lessor), license, mortgage, sell and leaseback or otherwise subject to any Lien (other than Permitted Liens), or otherwise dispose of any properties or assets (including Owned Real Property) or any interests therein, in each case with an aggregate value or purchase price in excess of $10,000,000 in any transaction or series of related transactions or $25,000,000 in the aggregate, other than (i) in the Ordinary Course of Business; (ii) pursuant to Contracts in existence on the date of this Agreement; or (iii) with respect to transactions between the Company, on the one hand, and any wholly owned Company Subsidiary, on the other hand, or between wholly owned Company Subsidiaries;
(h) except in the Ordinary Course of Business, cancel, fail to renew, or assign any material Real Property Lease;
(i) (i) incur, issue, modify, renew, syndicate or refinance any Indebtedness (other than any Indebtedness described in clause (viii) of the definition of Indebtedness), except for (A) Indebtedness in replacement of Indebtedness existing on the date hereof that would be repayable at the Closing without any premium or penalty; provided that the consummation of the Merger and other transactions contemplated hereby shall not conflict with, or result in any violation of or default under, such replacement Indebtedness and the terms of such replacement Indebtedness shall be substantially identical to, or no less favorable to the Company as, the terms of Indebtedness being replaced at the time of such replacement (including with respect to prepayment provisions); (B) Indebtedness under the Company’s existing revolving credit facility provided that the amount outstanding thereunder at any time does not exceed the amount outstanding thereunder as of the date hereof by greater than $100,000,000 in the aggregate; or (C) Indebtedness between the Company, on the one hand, and any wholly owned Company Subsidiary, on the other hand, or between wholly owned Company Subsidiaries or (ii) make any loans, capital contributions or advances to any Person (other than the Company and any wholly-owned Company Subsidiary) in an aggregate amount exceeding $1,000,000 in any transaction or any related transactions, or $5,000,000 in the aggregate.
(j) (i) enter into, amend or extend any Collective Bargaining Agreement or other labor agreement, (ii) enter into any new employee or independent contractor contracts, in any case that provides for annualized compensation payable by the Company or any of its Subsidiaries to any single individual employee in excess of $250,000 and, with respect to independent contractors, for annualized compensation to any single individual in excess of $250,000, in each case other than in the Ordinary Course of Business or in replacement of any individual whose employment or service terminates after the date hereof, (iii) accelerate the vesting or payment of the compensation payable or the benefits provided or to become payable or provided to any of its current or former directors, officers, employees, consultants or service providers, or otherwise pay any material severance (other than in the Ordinary Course of Business) or any material retention, change-in-control bonus or similar payment to any such individual, (iv) adopt, materially amend or terminate any Company Benefit Plan (including any employment, severance, consulting, or other individual agreement, policy or practice) or adopt or enter into any other material employee benefit plan or arrangement that would be considered a Company Benefit Plan if it were in existence on the date of this Agreement, in each case other than in the Ordinary Course of Business, (v) terminate the employment of any officer other than for cause in the Ordinary Course of Business, or (vi) make any deposits or contributions of cash or other property to or take any action to fund or in any other way secure the payment of compensation or benefits under the Company Benefit Plans or agreement subject to the Company Benefit Plans other than in the Ordinary Course of Business;
(k) assign, transfer, lease, cancel, fail to renew or fail to extend any material Company Permit;
(l) except as permitted by Section 6.06, settle, compromise or agree to settle any action or claim (including any action or claim relating to this Agreement or the transactions contemplated hereby), or release, dismiss or otherwise dispose of any claim, liability, obligation or arbitration, other than settlements or compromises of litigation or releases, dismissals or dispositions of claims, liabilities, obligations or arbitration (A) that involve the payment of monetary damages (excluding monetary damages that are fully covered by the Company’s insurance policies) in an amount not in excess of $2,000,000 individually or $7,500,000 in the aggregate by the Company or any Company Subsidiary, (B) that do not involve any material injunctive or other non-monetary relief or impose material restrictions on the business or operations of the Company and the Company Subsidiaries, taken as whole, (C) that do not relate to the transactions contemplated hereby and (D) that do not involve the issuance of any equity or voting interests;
(m) abandon, encumber, convey title (in whole or in part), transfer, exclusively license or grant any material right or other licenses to Owned Intellectual Property Rights other than in the Ordinary Course of Business;
(n) make, change or revoke any material election with respect to Taxes, change any material Tax accounting method, file any amended material Tax Return, settle or compromise any material Tax liability, enter into any closing agreement with respect to any material Tax or surrender any right to claim a material Tax refund;
(o) adopt or implement any shareholder rights plan or similar arrangement other than the Rights Agreement;
(p) make or authorize capital expenditures except (i) as budgeted in the Company’s current plan approved by its board of directors that was made available to Parent (the “Capital Expenditures Plan”), (ii) in the Ordinary Course of Business, (iii) otherwise in an amount not to exceed $25,000,000 in the aggregate or (iv) to the extent permitted under Section 5.01(f);
(q) enter into a material joint venture or partnership or similar third party business enterprise;
(r) (i) other than in the Ordinary Course of Business, materially modify, amend or waive any material right under or renew any Material Contract, (ii) enter into or extend the term or scope of any contract or agreement that purports to materially restrict the Company, or any Company Subsidiary, from engaging or competing in any line of business or in any geographic area, or (iii) enter into any Material Contract that would be breached by, or require the consent of any other Person in order to continue such contract or agreement in full force following, consummation of the transactions contemplated by this Agreement, solely in the case of clause (i) above, other than as permitted under another subsection of this Section 5.01; or
(s) agree to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. Pending the Merger. The Company covenants Stockholders covenant and agrees as to itself and the Company Subsidiaries agree that, at all times up to and including from the Effective Timedate of this Agreement until the Closing Date, unless Parent Group 1 shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure ScheduleAgreement:
(a) The business of the Company shall, and shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit take any Company Subsidiary toaction except in, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business and consistent with past practice. In connection therewith, the parties agree that the Company may dealer trade vehicles for similar models, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make liquidate or otherwise dispose of any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 their new vehicles other than in the ordinary course of business consistent to retail buyers. The Company agrees to maintain their advertising expenditures and activities commensurate with past practiceprior business practices. The Company shall not advertise a "Going Out of Business" sale;
(b) The Company shall not directly or indirectly do any of the following: (i) issue, sell, pledge, dispose of or encumber, (iiiA) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days capital stock (or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (ivsecurities convertible into capital stock) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (viiB) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shallpractice and not relating to the borrowing of money, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf any assets of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to TaxesCompany, (ii) make a request for a tax ruling amend or enter into a Tax Ruling propose to amend the articles of incorporation or bylaws (or other organizational documents) of the Company, (iii) split, combine or reclassify any outstanding capital stock of the Company, or declare, set aside or pay any dividend payable in cash, stock, property or otherwise with respect to its capital stock whether now or hereafter outstanding (except as defined provided in Section 6.3(j) below), settlement (iv) redeem, purchase or compromise acquire or offer to acquire any of its capital stock, (v) create, incur, assume, guarantee or otherwise become liable or obligated with respect to any material Tax matterindebtedness for borrowed money (other than floor plan indebtedness incurred in the ordinary course of business), or (iiivi) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither enter into any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Section 6.3(b);
(c) The Company shall use its best efforts (i) to preserve intact the business organization of the Company, (ii) to maintain in effect any franchises, authorizations or similar rights of the Company, (iii) to keep available the services of its current officers and key employees, (iv) to preserve the goodwill of those having business relationships with it, (v) to maintain and keep its properties in as good a repair and condition as presently exists, except for deterioration due to ordinary wear and tear, (vi) to maintain in full force and effect insurance comparable in amount and scope of coverage to that currently maintained by it, (vii) to collect its accounts receivable, (viii) to preserve in full force and effect all leases, operating agreements, easements, rights-of-way, permits, licenses, contracts and other agreements which relate to its assets (other than those expiring by their terms), and (ix) to perform or cause to be performed all of its obligations in or under any of such leases, agreements and contracts.
(d) The Company shall not make or agree to make any single capital expenditure or enter into any purchase commitments in excess of $50,000;
(e) The Company shall perform its obligations under any contracts and agreements to which it is a party or to which its assets are subject, except for such obligations as the Company nor any in good faith may dispute;
(f) The Company Subsidiary shall declarenot increase the salary, set aside or pay any dividends or distributions (whether in cashbenefits, stock options, bonus or property) in respect other compensation of any capital stock officer, director or employee of the Company other than consistent with past business practices of the Company; and shall not grant, to any individual, severance or termination pay that exceeds the lesser of (i) such individual's compensation for the calendar month immediately preceding such individual's grant of severance or termination pay, or (ii) $50,000;
(g) The Company shall not take any Company Subsidiary action that would, or redeemthat reasonably could be expected to, purchase or otherwise acquire result in any of the capital stock representations and warranties set forth in this Agreement becoming untrue or any of the conditions to the Merger set forth in Article VIII not being satisfied;
(h) The Company shall not (i) amend or terminate any Plan or Benefit Program or Agreement except as may be required by applicable law, (ii) increase or accelerate the payment or vesting of the amounts payable under any Plan or Benefit Program or Agreement, or (iii) adopt or enter into any personnel policy, stock option plan, collective bargaining agreement, bonus plan or arrangement, incentive award plan or arrangement, vacation policy, severance pay plan, policy or agreement, deferred compensation agreement or arrangement, executive compensation or supplemental income arrangement, consulting agreement, employment agreement or any other employee benefit plan, agreement, arrangement, program, practice or understanding (other than the Plans and the Benefit Programs or Agreements);
(i) The Company Subsidiaryshall not enter into any agreement or incur any obligation, the terms of which would be violated by the consummation of the transactions contemplated by this Agreement;
(j) Notwithstanding anything in this Agreement to the contrary, dividends or other form of distribution to the Stockholders may be made after the date of the Interim Balance Sheet so long as such distributions do not cause the Company to be in violation of any manufacturer working capital or equity guidelines or requirements; and
(tk) Neither The Stockholders will not revoke the Company nor any Company Subsidiary shall agree, in writing or otherwise, Company's election to take any be taxed as an S corporation within the meaning of sections 1361 and 1362 of the actions prohibited by the foregoing clauses (a) through (s)Code.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Group 1 Automotive Inc)
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries ---------------------------------- that, at all times up to and including the Effective Time, unless Parent Sysco shall otherwise consent in writing, which consent between the date hereof and the Control Date, the Business shall be conducted in, and Guest Supply shall not be unreasonably withheldtake any action except in, or as otherwise expressly permitted or the ordinary course of Business and in a manner consistent with its past practice; and Guest Supply will use its commercially reasonable efforts consistent with past practices, but recognizing the effects that the transaction contemplated by this Agreement or as set forth on hereby may have, to preserve substantially intact the Company Disclosure Schedule:business organization of the Business, to keep available the services of the present officers, employees and consultants of Guest Supply and to preserve the present relationships of Guest Supply with customers, suppliers and other persons with which Guest Supply has significant business relations.
(a) The Company shallBy way of amplification and not limitation, and shall cause each Company Subsidiary to, conduct its business only except as expressly provided for in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, between the date hereof and shall not permit the Control Date, directly or indirectly, do any Company Subsidiary toof the following in respect of the Business without the prior written consent of Sysco:
(i) (A) issue, make sell, pledge, dispose of, encumber, authorize, or propose to make any change in its dividend practices the issuance, sale, pledge, disposition, encumbrance or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or authorization of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or shares of capital stock of any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesclass, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Lawwarrants, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement convertible securities or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of capital stock of, or interests any other ownership interest in, or to receive any payment based on the value ofGuest Supply; provided, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Lawhowever, the Company shall not, and shall not permit any Company Subsidiary have -------- ------- the right to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except issue Common Stock pursuant to the terms of agreements Company's Employee Stock Purchase Plan and to issue Common Stock to those persons and entities who properly exercise or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per yearconvert a Company Stock Option, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance warrant or other employee benefit not required by the current terms of any existing planconvertible security to acquire Common Stock which Company Stock Options, agreement or arrangement warrants and convertible securities were issued and outstanding prior to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement; (B) amend or propose to amend the Certificates of Incorporation, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers bylaws (or other employees comparable organizational document) of Guest Supply; (C) split, combine or agents of such party or reclassify any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition outstanding share of the Company, any Company Subsidiary's capital stock, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends dividend or distributions (whether distribution payable in cash, stock stock, property or propertyotherwise with respect to the Company's capital stock; (D) in respect of any capital stock of the Company redeem, purchase or any Company Subsidiary otherwise acquire or offer to redeem, purchase or otherwise acquire any shares of the Company's capital stock of the Company stock; or (E) enter into any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agreecontract, in writing agreement, commitment or otherwise, arrangement with respect to take any of the actions prohibited matters set forth in this Section 3.4(a)(i);
(ii) (A) directly or indirectly acquire (by merger, consolidation, or acquisition of stock or assets) any interest in any entity or person; (B) except in the ordinary course of Business and in a manner consistent with its past practices, sell, pledge, dispose of, or encumber or authorize or propose the sale, pledge, disposition or encumbrance of any assets of Guest Supply used or held for use by the foregoing clauses Business; (aC) through enter into any material contract or agreement, except in the ordinary course of Business and in a manner consistent with its past practice; (sD) authorize any single capital expenditure in excess of $50,000 or capital expenditures in the aggregate in excess of $200,000; or (E) enter into or amend any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Section 3.4(a)(ii);
(iii) take any action other than in the ordinary course of Business and in a manner consistent with its past practice with respect to increasing compensation (including bonuses), or other remuneration of any director, officer or employee of Guest Supply or with respect to the grant of any severance or termination pay (otherwise than as fully disclosed to Sysco in writing prior thereto) or with respect to any increase of benefits payable under its severance or termination pay policies in effect on the date hereof;
(iv) make any payments except in the ordinary course of Business and in amounts and in a manner consistent with its past practice (none of which payments shall be unreasonable or unusual), under any Employee Benefit Plan (defined in Section 4.18), or otherwise to any employee of Guest Supply, enter into any Employee Benefit Plan, any employment or consulting agreement, grant or establish any new awards under any such existing Employee Benefit Plan or agreement, or adopt or otherwise amend (except as required or contemplated hereby) any of the foregoing;
(v) take any action, except in the ordinary course of Business and in a manner consistent with past practice, with respect to, or make any change in, its methods of management, purchasing, distribution, marketing, or operating (or practices relating to payment of trade accounts or to other payments or relating to writing down or failing to write down or writing up the value of any inventory or other assets of Guest Supply) or make any change in the method of accounting of Guest Supply;
(vi) take any action to incur or increase prior to the Control Date any indebtedness for borrowed money from banks, financial institutions, or any other persons or entities (other than trade payables incurred in the ordinary course of Business and in a manner consistent with its past practices and other than borrowings under existing credit facilities) or cancel without payment in full, any notes, loans or, except in the ordinary course of Business and in a manner consistent with its past practices, other receivables;
(vii) loan or advance monies to any person under any circumstance whatsoever, except travel advances, advances in connection with vacations, or other reasonable expense advances to employees of Guest Supply but in no event shall any advance exceed $1,000 per person;
(viii) change any existing bank accounts or lock box arrangements of Guest Supply except for deposits, withdrawals or changes in signatories in the ordinary course of Business and in a manner consistent with its past practices;
(ix) waive any material rights of Guest Supply or settle any single claim involving more than $50,000 or in the aggregate involving more than $200,000; or
(x) do any act or omit to do any act which would cause a material breach of any material contract, commitment or obligation of Guest Supply.
Appears in 1 contract
Samples: Merger Agreement (Guest Supply Inc)
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or (a) Except as set forth on in Section 5.1(a) of the Company Disclosure Schedule:
(a) The Company shallLetter, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as expressly contemplated by this Agreement, required by applicable Law or as consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement to the Effective Time, the Company shall notwill, and shall will cause the Company Subsidiaries to, carry on their respective businesses in the ordinary course consistent with past practice and in compliance with all applicable Laws and, to the extent consistent therewith, use reasonable best efforts to preserve substantially intact their current business organizations and goodwill, keep available the services of their current officers and other key employees and preserve their relationships with significant customers, suppliers, distributors and other persons having business dealings with them, and Governmental Entities having regulatory dealings with them, and keep in force the insurance policies and Permits of the Company and the Company Subsidiaries.
(b) Without limiting the generality of Section 5.1(a), except as (w) set forth in Section 5.1(b) of the Company Disclosure Letter, (x) expressly contemplated by this Agreement, (y) required by applicable Law, or (z) consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement to the Effective Time, the Company will not and will not permit any Company Subsidiary to:
(i) (A) declare, make set aside or propose to pay any dividends on, or make any change other distributions in respect of, any of its dividend practices capital stock, other than dividends and distributions by a direct or policies indirect wholly owned Company Subsidiary to its parent, (B) split, combine or reclassify any of its capital stock, or (C) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, other than (1) the acquisition by the Company of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price of such Company Stock Options, (2) the withholding of shares of Company Common Stock to satisfy Tax obligations with respect to awards granted pursuant to the Company Stock Plan, and (3) the acquisition by the Company of Company Common Stock in connection with the forfeiture of awards granted pursuant to the Company Stock Plan;
(ii) issue or authorize the issuance of, deliver, sell, pledge or otherwise encumber or subject to any Lien, any shares of its capital stock (or any other securities in respect of, in lieu of, or in substitution for, shares of its underwritingcapital stock), pricingany other voting securities or any securities convertible into or exercisable for, claimsor any rights, risk retentionwarrants or options to acquire, investmentany such shares, reinsurance practices voting securities or policies convertible securities, or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units, other than, as applicable, (A) upon the exercise or vesting of awards under the Company Stock Plan, (B) grants of awards under the Company Stock Plan (including to directors), in each case under this clause (B) in the ordinary course of business consistent with past practice (1) to any material respectofficer or employee of the Company or any Company Subsidiary in the context of promotions based on job performance or workplace requirements, (2) in connection with new hires, or (3) in connection with normal annual grants to any director, officer or employee of the Company or any Company Subsidiary; provided, however, that in no event will the number of shares of Company Common Stock underlying or delivered pursuant to such grants, whether paid in cash, shares or other property, exceed, individually or in the aggregate, 100,000, (D) upon the conversion of the Company’s 2012 Notes and 2017 Notes outstanding on the date of this Agreement and in accordance with the terms of the applicable indenture in effect on the date of this Agreement, or (E) in connection with the exercise of the Top-Up Option;
(iii) amend the Company Charter or Company’s bylaws or the similar organizational documents of the Company Subsidiaries, other than to comply with SEC rules and regulations or the DGCL;
(iv) purchase an equity interest 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 by the Company and the Company agrees that it will notify Parent Subsidiaries in connection with all such transactions would exceed $25 million or merge or consolidate with any person, in each case other than any such action solely between or among the Company and provide Parent with information in reasonable detail regarding its wholly owned Company Subsidiaries;
(v) sell, lease, license, mortgage or otherwise encumber or subject to any material transactions Lien (excluding investment transactions other than a Company Permitted Lien) or otherwise dispose of any of its properties, rights or assets other than dispositions of personal property, inventory or Company Owned Real Property or Company Leased Real Property other than in the ordinary course of business consistent with past practice;
(vi) enter into or agree to enter into commitments for capital expenditures involving more than $40 million in the aggregate, but including transactions involving except (A) as may be necessary for the securitization maintenance of Assets existing facilities, machinery and equipment in good operating condition and repair in the ordinary course of business consistent with past practice or (B) as reflected in the capital expenditures budget of the Company previously provided to Parent;
(vii) redeem, repurchase, prepay, defease, incur or otherwise acquire, or modify in any material respect the terms of, any indebtedness for borrowed money, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of the Company Subsidiaries, or guarantee, endorse, assume or otherwise become responsible for any such indebtedness or any debt securities of another person or enter into any “keep well” or other contract to maintain any financial statement condition of another person, other than (1) indebtedness not existing on the date of this Agreement incurred in the ordinary course of business (including any borrowings under the Company’s existing revolving credit facilities and any letters of credit) not in excess, at any one time outstanding, of $50 million, (2) indebtedness incurred in connection with the refinancing of any indebtedness existing on the date of this Agreement as such indebtedness matures and using commercially reasonable efforts to obtain comparable terms and conditions, and (3) indebtedness owed to the Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any of the Company Subsidiary is seriously consideringSubsidiaries, so long as such indebtedness, in each case in this Section 5.1(b)(vii) can be repaid with no more than 30 days’ notice and with no premium or penalty;
(cviii) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur as required to comply with applicable Law, or as required by the terms of any indebtedness for money borrowed in the aggregate for Company Benefit Plan or other written agreement of the Company and or any Company Subsidiary in effect on the date hereof, (A) materially increase the compensation or benefits payable or to become payable by the Company Subsidiaries in excess or any Company Subsidiary to any current or former director, executive officer or employee of $200,000 for the Company or any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 daysCompany Subsidiary, (ivB) agree establish, adopt, enter into, terminate or materially amend, or take any action to accelerate the vesting or payment of any mergermaterial compensation or benefits under, consolidation, demutualization, acquisition, redomestication, sale of all any Company Benefit Plan or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, any award thereunder (other than a Superior Acquisition Proposal as permitted hereinrenewal occurring in accordance with the terms thereof that does not result in materially increased cost to Company), (vC) prior to notifying Parentmaterially increase the severance, change in control or termination pay of any director, officer or employee of the Company or any Company Subsidiary, or (D) enter into any material partnershipemployment, joint venture consulting, severance or profit sharing contract, other than contracts termination agreement with insurance agents any director or executive officer of Company or any Company Subsidiary;
(ix) change the accounting principles used by it unless required by applicable Law or GAAP;
(x) except in the ordinary course of business consistent with past practicespractice or as otherwise required by applicable Law or regulatory guidance, (vi) make, change or rescind any express or deemed election with respect to Taxes, settle or compromise any claim or action relating to Taxes, change any of its material methods of accounting or of reporting income or deductions for Tax purposes, agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of Taxes, enter into any contract limiting closing agreement with respect to any Tax or surrender any right to claim a Tax refund;
(xi) except as required by applicable Law or any judgment by a court of competent jurisdiction, pay, discharge, settle or satisfy any claims or liabilities (absolute, accrued, asserted or unasserted, contingent or otherwise), investigations, or proceedings, in each case made or pending against the ability Company or any of the Company Subsidiaries, or any of their officers and directors in their capacities as such, other than the payment, discharge, settlement or satisfaction of claims or litigation or any Company Subsidiary to engage investigation or proceeding, in the ordinary course of business consistent with past practice, which, in any businessevent (A) is for an amount not to exceed, to compete with for any Personsuch payment, to do business with any Person discharge, settlement or satisfaction individually, $2 million and $5 million, for all such payments, discharges, settlements or satisfactions, in any location the aggregate (or to employ any Person, (vii) enter into any contract relating to would not entail the direct or indirect guarantee incurrence of any obligation or liability of the Company in excess of such amounts, including costs or revenue reductions) and (B) would not or would not be reasonably expected to impose any Person material restrictions on the business or operations of the Company and the Company Subsidiaries as conducted and operated on the date of this Agreement;
(xii) make any loans, advances or capital contributions to, or investments in, any other person, except for loans, advances, capital contributions or investments between any wholly owned Company Subsidiary and the Company or another wholly owned Company Subsidiary and except for employee advances for expenses in respect the ordinary course of indebtedness for borrowed money or other financial obligation of any Person business consistent with past practice;
(xiii) other than in the ordinary course of business consistent with past practice, (viii) enter into cancel or forgive any contract that is reasonably likely material indebtedness owed to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company SubsidiarySubsidiary by a third party;
(fxiv) Except take any action to exempt or not make subject to the provisions of Section 203 of the DGCL or any other state takeover Law or state Law that purports to limit or restrict business combinations or the ability to acquire or vote shares, any person (xother than Parent and Merger Sub), or any action taken thereby, which person or action would have otherwise been subject to the restrictive provisions thereof and not exempt therefrom;
(xv) authorize or adopt, or publicly propose, a plan of complete or partial liquidation or dissolution of the Company;
(xvi) (A) materially amend, terminate (other than as set forth terminated in accordance with its terms) or cancel, or grant material waivers under, any Company Material Contract or (B) other than with respect to any transaction or activity otherwise expressly permitted by this Section 5.1(b), enter into any other contract that, if it had been entered into prior to the date hereof, would constitute a Company Disclosure ScheduleMaterial Contract;
(xvii) enter into material interest rate swaps, (y) foreign exchange or commodity agreements and other similar hedging arrangements other than in the ordinary and usual course of business consistent with past practicepractice for purposes of offsetting a bona fide exposure (including counterparty risk); or
(xviii) authorize, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent (a) Except for matters set forth in writing, which consent shall not be unreasonably withheld, Schedule 5.01 or as otherwise expressly permitted or contemplated by this Agreement, from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
(a) The Effective Time the Company shall, and shall cause each Company Subsidiary to, conduct its business only in the usual, regular and ordinary course and in substantially the same manner as heretofore previously conducted since December 31and, 1999to the extent consistent therewith, and the Company and each Company Subsidiary shall use all reasonable best efforts to maintain and preserve intact its present current business organization organization, keep available the services of its current officers and preserve employees and keep its regular services torelationships with customers, suppliers, licensors, licensees, distributors, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as them. In addition, and without limiting the generality of the foregoing, except for matters set forth in Schedule 5.01 or expressly contemplated by this Agreement, from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall notfollowing without the prior written consent of Parent, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and which consent shall not permit any Company Subsidiary to (i) adopt be unreasonably withheld, conditioned or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;delayed:
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (iA) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends on, or make any other distributions (whether payable in cash, stock stock, property or propertya combination thereof) in respect of, any of its capital stock, other than dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to the Company or another wholly owned subsidiary of the Company or make any other actual, constructive or deemed distribution in respect of the shares of capital stock, (B) split, combine, subdivide, recapitalize or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (C) purchase, repurchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Company or any Company Subsidiary or redeemany other securities thereof or any rights, purchase warrants or otherwise options to acquire any such shares or other securities, except for shares of Company Common Stock delivered to the Company to pay the exercise price or Tax withholding obligations under any Company Option or Restricted Stock Unit award; provided, however, this clause (i) shall not prevent (x) the Company or any wholly owned Company Subsidiary from taking any of the foregoing actions with respect to the Equity Interests of any wholly owned Company Subsidiary or (y) the conversion of any indebtedness owed by any Company Subsidiary to the Company or any Company Subsidiary into Equity Interests, in each case, solely to the extent that any such action does not result in a material adverse Tax consequence to the Company and the Company Subsidiaries, taken as a whole;
(ii) authorize for issuance, issue, deliver, sell, transfer, assign, pledge, encumber or grant, or agree or commit to issue, deliver, sell, transfer, assign, pledge, encumber or grant, (A) any shares of its capital stock or any other Equity Interest in the Company or any Company Subsidiary, (B) any Voting Company Debt or other voting securities or (C) any securities convertible into or exchangeable for any shares of capital stock of the Company or any Company Subsidiary; and, other than (x) the issuance of Company Common Stock upon the exercise or settlement of Company Options or Restricted Stock Units outstanding on the date of this Agreement and in accordance with their present terms and (y) the issuance of any Equity Interests by a Company Subsidiary to the Company or another wholly owned Company Subsidiary ;
(tiii) Neither amend its certificate of incorporation, by-laws or other comparable charter or organizational documents or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company nor or any Company Subsidiary;
(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing all or substantially all the assets of or all or substantially all the outstanding Equity Interests in, any business or any corporation, partnership, joint venture, limited liability company or other company, association or other business organization or (B) any assets that are material, individually or in the aggregate, to the Company and the Company Subsidiaries, taken as a whole, except purchases of inventory in the Ordinary Course of Business;
(v) except (x) to the extent required by any Company Benefit Plan in effect on the date hereof or created or modified in accordance with this Section 5.01(a)(v) or Section 5.01(a)(vi), (y) in the Ordinary Course of Business, or (z) as required by applicable Law, (A) grant any increase in compensation to any Service Provider, (B) pay any bonus, grant any new awards (including any equity awards), or modify any existing awards (including to accelerate the vesting or payment thereof) under any Company Benefit Plan or any arrangement that would have been a Company Benefit Plan had it been in effect as of the date hereof, (C) enter into any employment, consulting, severance, termination or similar agreement with any current or former Service Provider, (D) hire, promote or terminate without “cause” (as determined by the Company in its sole discretion) any Service Provider, (E) take any action to accelerate the time of vesting or payment of any material rights or benefits under any collective bargaining agreement or Company Benefit Plan in effect as of the date hereof, except as required by the terms of such collective bargaining agreement or Company Benefit Plan, (F) forgive any loans, or issue any loans, to any Service Provider, other than routine travel or business expense advances or relocation benefits, or (G) establish or adopt any bonus or short-term incentive plan for any calendar year after 2019; provided, however, that, notwithstanding anything to the contrary herein, from the date hereof through the Effective Time, the Company shall not without consent of Parent (1) grant any new equity or equity-based awards, (2) grant any increase in compensation to any Senior Manager that is inconsistent with Schedule 5.01(a)(v)(3) or (3) establish or adopt any bonus or short-term incentive plan for any calendar year after 2019 for any Senior Manager in a manner that is inconsistent with Schedule 5.01(a)(v)(5); provided, further, that, notwithstanding anything to contrary herein, no Ordinary Course of Business exception will be deemed to apply to the entry into a severance agreement as contemplated by this Section 5.01(a)(v)(C) or to actions contemplated by this Section 5.01(a)(v)(D), in each case, with any Service Provider with the title of Executive Vice President or above.
(vi) except (x) to the extent required by any Company Benefit Plan in effect on the date hereof or created or modified in accordance with Section 5.01(a)(v) or this Section 5.01(a)(vi), (y) in the Ordinary Course of Business or (z) as required by applicable Law, (A) change any actuarial or other assumptions used to calculate funding obligations for any Company Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (B) take any action to fund, or in other way secure the payment, of compensation or benefits under any Company Benefit Plan by irrevocably setting aside or contributing to a trust or similar funding vehicle that requires that such funds remain segregated from the Company’s assets cash, property or a combination thereof for the benefit of Service Providers (it being understood that a funding will not be considered revocable solely due to a reversionary interest in such funds upon overfunding or plan termination), or (C) establish, adopt, extend, renew, enter into or amend in any material respect any collective bargaining agreement or any Company Benefit Plan or any arrangement that would be a Company Benefit Plan if it were in existence on the date hereof; provided, however, that notwithstanding anything to contrary herein, (1) no Ordinary Course of Business exception will be deemed to apply to actions contemplated by this Section 5.01(a)(vi)(B) and (2) the Ordinary Course of Business exception as pertains to this Section 5.01(a)(vi)(C) will be deemed to also require that such action would not result in a material increase in annual costs to the Company and its Subsidiaries, taken as a whole (and, for the avoidance of doubt, such material increase limitation shall not apply to any actions expressly contemplated in Schedule 5.01(a)(v) or Schedule 5.01(a)(vi));
(vii) make any change in accounting methods, principles, practices or policies, except as may be required by a change in GAAP, IFRS or applicable Law;
(viii) sell, lease (as lessor), license, transfer, pledge, encumber or otherwise dispose of or subject to any Lien any of its material properties or assets, except for sales of inventory and excess or obsolete assets in the Ordinary Course of Business;
(ix) incur any indebtedness for borrowed money or guarantee, endorse, assume or otherwise become liable or responsible (directly or indirectly) for any such indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Company Subsidiary or guarantee any debt securities of another Person, in an amount in excess of $10,000,000 (individually) or $20,000,000 (in the aggregate), except for (A) short-term borrowings incurred in the Ordinary Course of Business and (B) trade payables, letters of credit, parent guarantees and similar arrangements entered into in the Ordinary Course of Business to or for the benefit of suppliers and manufacturers; provided that the Company or any Company Subsidiary shall agreenot incur, issue, sell or guarantee any such amounts in compliance with this clause (ix) that are secured by a Lien (other than amounts under Existing Credit Facilities) in excess of $10,000,000 (individually) or $20,000,000 (in the aggregate) and, if so secured, the Company shall deliver payoff letters and release and termination documentation for such amounts on the Closing Date in the same manner as set forth in Section 6.11;
(x) make or agree to make any new capital expenditure or expenditures (A) that, individually, is in excess of $5,000,000 or, in the aggregate, are in excess of $15,000,000 during any fiscal quarter or (B) that would be in violation of Section 5.01(b);
(xi) make, change or revoke any material Tax election, amend any material Tax Returns, file any claims for material Tax refunds, settle any material Tax claim (other than those for which adequate reserves have been established), audit or assessment or surrender any right to claim a material Tax refund, offset or other reduction in Tax liability, change any annual Tax accounting period, adopt or change any method of Tax accounting or enter into any material “closing agreement” within the meaning of Section 7121 of the Code (or similar provision of state, local or non-U.S. Law);
(xii) make any loan, advance or capital contribution to or investments in any other Person (other than any loans or advances made to employees or any loan, advance or capital contribution to or investments solely between or among the Company and/or one or more Company Subsidiaries, in each case, in the Ordinary Course of Business);
(xiii) abandon any existing business or enter into any new line of business;
(xiv) revalue in any material respect any of its material properties or assets, including writing off notes or otherwiseaccounts receivable, in any case other than as required by applicable Law, IFRS or GAAP;
(xv) (A) cancel any material indebtedness owed to the Company or any Company Subsidiary (other than any indebtedness owing from a wholly owned Company Subsidiary to the Company and/or one or more other Company Subsidiaries) or (B) waive, release, grant or transfer any material claim or right of material value or consent to the termination of any material claim or right of material value; provided, however, this clause (xv) shall not prohibit the Company or any Company Subsidiary from taking any actions expressly permitted by any clause of this Section 5.01(a) or required to be taken by any other provision of this Agreement;
(xvi) commence, settle or compromise any pending or threatened Proceedings if such settlement would (A) require payment by the Company in excess of $1,000,000 in any individual case or series of related cases or $5,000,000 in the aggregate with all other Proceedings, (B) involve injunctive or equitable relief or (iii) impose any material restrictions or changes on the business or operations of the Company or any Company Subsidiary;
(xvii) other than in the Ordinary Course of Business (A) amend, modify or terminate (which, for the avoidance of doubt, shall not include any expiration or renewal of a Company Contract in accordance with its then-existing term), or waive, release or assign rights claims or benefits under, any Company Contract in such a way as to reduce the expected business or economic benefits thereof or (ii) enter into any new Contract that, if entered into prior to the date of this Agreement, would constitute a Company Contract, in each case other than in the Ordinary Course of Business; provided, however, this clause (xvii) shall not prohibit the Company or any Company Subsidiary from taking any actions expressly permitted by any clause of this Section 5.01(a) or required to be taken by any other provision of this Agreement;
(xviii) sell, license, sublicense, covenant not to xxx under, abandon, assign, transfer, disclose, create any Lien on (other than Permitted Liens) or otherwise grant any rights under any Owned Company Intellectual Property that is material to the Company and the Company Subsidiaries, taken as a whole, or amend, renew, terminate, sublicense, assign or otherwise modify any license or other agreement by the Company or any Company Subsidiary with respect to any licensed Owned Company Intellectual Property that is material to the Company and the Company Subsidiaries, taken as a whole, in each case other than in the Ordinary Course of Business;
(xix) cancel, terminate or allow to lapse without a commercially reasonable substitute policy therefore, or amend in any material respect or enter into, any insurance policy, other than the renewal of an existing insurance policy or a commercially reasonable substitute therefor;
(xx) sell or acquire any real property;
(xxi) enter into or consummate any Related Party Transaction; or
(xxii) authorize any of, or resolve, commit or agree to take any of of, the foregoing actions.
(b) The parties agree to take the actions prohibited by the foregoing clauses (a) through (sdescribed in Schedule 5.01(b).
Appears in 1 contract
Samples: Agreement and Plan of Merger (Anixter International Inc)
Conduct of Business by the Company. The Company covenants and agrees During the period from the date of this Agreement to the Closing Date, except (a) as to itself and otherwise expressly contemplated or permitted by this Agreement, (b) as set forth on Section 5.1 of the Company Subsidiaries thatDisclosure Memorandum, at all times up to and including or (c) with the Effective Time, unless written consent of Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, conditioned, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on delayed), the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, (i) maintain its existence under applicable Law, (ii) conduct its business only and operations in the ordinary and usual course of business and in substantially the same a manner as heretofore conducted since December 31, 1999consistent with prior practice and in accordance with applicable Law, and the Company and each Company Subsidiary shall (iii) use all commercially reasonable efforts to preserve intact keep available the services of its present business organization current officers and employees and preserve the rights, franchises, goodwill and relations of its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokersclients and others with whom business relationships exist. Without limiting the generality of the foregoing, suppliers the Company covenants and all others having business dealings with it;
agrees that between the date of this Agreement and the Closing Date, without the prior written consent of Parent (bwhich consent shall not be unreasonably withheld, conditioned, or delayed) Except or as expressly contemplated or permitted by this Agreement, or required by a Governmental Authority or applicable Law, or as set forth in Section 5.1 of the Company Disclosure Memorandum, the Company shall not, and shall cause its Subsidiaries not permit to, directly or indirectly:
(a) amend its Charter Documents;
(b) adjust, split, combine or reclassify any Company Subsidiary toshares of its capital stock or other equity interests or declare, set aside, make or propose pay any dividend or other distribution (whether in cash, shares, equity interests or property or any combination thereof) in respect of its capital stock or equity interests, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase or otherwise acquire any of its securities, provided that prior to closing, the Company shall be permitted, without the consent of Parent, to pay its shareholders a dividend equal to the cumulative, aggregate amount its shareholders would have received prior to closing if the Company’s shareholders were shareholders of record of Parent as of the record date for Parent’s dividend(s) beginning in the 2022 third fiscal quarter;
(c) sell, lease, renew or terminate the lease of, transfer, mortgage, encumber or otherwise dispose of any of its properties or assets, other than (i) as contemplated by this Agreement, (ii) in the ordinary course of business, (iii) or obsolete or written off assets;
(i) acquire direct or indirect control over any business or Person, whether by stock purchase, merger, consolidation or otherwise; or (ii) make any change other investment either by purchase of stock or equity securities other than securities held in its dividend practices the Company’s investment securities or policies derivatives portfolio, contributions to capital, property transfers or purchase of any property or assets of any other Person, except, in its underwritingeither instance, pricing, claims, risk retention, investment, reinsurance practices in connection with a foreclosure of collateral or policies conveyance of such collateral in any material respect; and the Company agrees that it will notify Parent and provide Parent lieu of foreclosure taken in connection with information in reasonable detail regarding any material transactions (excluding investment transactions collection of a Loan in the ordinary course of business consistent with past practicepractice and with respect to Loans made to third parties who are not Affiliates of the Company;
(e) incur any indebtedness for borrowed money, but including transactions involving issue or sell any debt securities or warrants or other rights to acquire any debt securities, guarantee any such indebtedness or any debt securities of another Person, or enter into any “keep well” or other agreement to maintain any financial statement condition of another Person, other than, in each case to the securitization extent incurred in the ordinary course of Assets business, indebtedness in respect of deposit liabilities, federal funds, borrowings from the Federal Reserve and repurchase agreements;
(f) commence any material Proceeding or, except for Proceedings with respect to which an insurer has the right to control the decision to settle, settle any claim or litigation, in each case whether commenced by or pending or threatened against the Company, or any of its officers and directors in their capacities as such, other than the commencement or settlement of Proceedings in the ordinary course of business and settlements which, in any event (i) is for an amount not to exceed accruals therefor reflected in the Balance Sheet with respect to the applicable Proceeding (or series of related Proceedings) and (ii) reasonably would not be expected to prohibit or restrict the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringits Subsidiaries from operating its business in the ordinary course;
(cg) The Company shall not make any material change in to its accounting methods methods, principles or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPapplicable Law;
(dh) The Company shall not, and shall not permit except as required under any Company Subsidiary toEmployee Benefit Plan, (i) amend increase the compensation, severance, benefits, change of control payments or any other amounts payable to its charter present or byformer officers, employees or directors, other than nonmaterial increases in compensation or benefits for non-laws (unless contemplated hereby)executive employees made in the ordinary course of business consistent with past practice including specifically but not limited in connection with the opening of new branches or offices, (ii) incur pay or award, or commit to pay or award, any individual Liability bonuses or series incentive compensation, (iii) establish, adopt, enter into, amend or terminate any collective bargaining agreement or Employee Benefit Plan, other than any amendments in the ordinary course of related Liabilities business consistent with past practice that do not materially increase the cost to the Company, in the aggregate, of maintaining such Employee Benefit Plan, or (iv) take any action to accelerate any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any such individual;
(i) hire any new employees except to replace employees listed on Section 3.11(d) of the Company Disclosure Memorandum on comparable terms and conditions and consistent with past hiring practices or to staff new offices which are being opened;
(i) grant any stock appreciation rights, options, restricted stock, restricted stock units, awards based on the value of Company Common Stock or other equity interests of the Company or other equity-based compensation or grant to any Person any right to acquire any shares of its capital stock, (ii) issue or commit to issue any additional shares of capital stock of the Company, other than the issuance of shares of Company Common Stock upon the exercise of any Company Options or the vesting and settlement of any Company Equity Awards, in each case, that are outstanding on the date hereof and in accordance with the terms of the applicable award agreement, (iii) issue, sell, lease, transfer, mortgage, encumber or otherwise dispose of any capital stock in any of the Company’s Subsidiaries, or (iv) enter into any agreement, understanding or arrangement with respect to the sale or voting of its capital stock;
(k) make or change any Tax election different from its prior course of practice, settle or compromise any Tax liability, fail to file any Tax Return when due (taking extensions into account), enter into any closing agreement with respect to Taxes, file any amended Tax Return or surrender any right to claim a Tax refund, offset or other reduction in Tax liability;
(l) fail to use commercially reasonable efforts to maintain existing insurance policies or comparable replacement policies to the extent available for a reasonable cost;
(m) enter into any new line of business or change in any material respect its lending, investment, underwriting, risk and asset liability management, interest rate or fee pricing with respect to depository accounts, hedging and other material banking and operating policies or practices;
(n) acquire or accept any brokered deposit having a maturity longer than one year, other than in the ordinary course of business;
(o) file any application to establish, or to relocate or terminate the operations of, any banking office;
(p) materially restructure or materially change its investment securities portfolio, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported other than in the ordinary course of business and consistent with past practices;
(q) change in any material respect its credit policies and collateral eligibility requirements and standards;
(r) except for Loans or commitments for Loans (or renewals or extensions thereof) that have previously been approved by the Company prior to the date hereof, make or acquire or issue a commitment for (or renew or extend)
(i) any commercial real estate loan in an original principal amount in excess of $200,000 5,000,000, (ii) any residential loan originated for retention in the loan portfolio in an original principal amount in excess of $1,500,000 or with loan to value ratios in excess of the Company’s internal polices as in effect on the date hereof or (iii) any commercial and industrial loan in an original principal amount in excess of $4,000,000;
(s) extend additional funds to a Loan classified as “criticized”, except for protective advances and extensions of additional credit of up to $500,000 (for purposes of this paragraph, a “criticized” Loan means any Loan classified as substandard, non-accrual, doubtful or a troubled debt restructuring (or words of similar import)); provided, that for the purpose of this paragraph, the consent of Parent shall be deemed received unless Parent objects in writing by the close of business on the next Business Day (or, if later, 24 hours) after receipt of notice from the Company;
(t) enter into, renew, amend or terminate any Material Contract, other than (a) renewing or terminating any Material Contract in the ordinary course of business or (b) entering into a Material Contract which calls for aggregate annual payments of not more than $150,000 and which is terminable on sixty (60) days or less notice without payment of any termination fee or penalty;
(u) adopt a plan of complete or partial liquidation or dissolution;
(v) purchase or otherwise acquire any assets or incur any liabilities other than in the ordinary course of business consistent with past practicepractices and policies and subject to any other restrictions set forth in this Section 5.1;
(w) take any action or knowingly fail to take any action, which action or failure to act could reasonably be expected to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Code;
(iiix) incur take or fail to take any indebtedness for money borrowed action that could reasonably be expected to cause the representations and warranties made in Article 3 to be inaccurate in any material respect at the aggregate for time of the Closing or preclude the Company from making such representations and warranties at the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability time of the Company Closing;
(y) take any action that is intended to or of any Company Subsidiary would reasonably be likely to engage result in any business, to compete with any Person, to do business with any Person of the conditions set forth in Article 7 not being satisfied or in any location prevent or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect delay the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements take any action that is intended to or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary would reasonably be expected to (i) adopt or implement, or commit to adopt or implement, adversely affect or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner delay the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets ability of the Company or its Subsidiaries to obtain any Company Subsidiary which took place since necessary approvals of any Governmental Authority required for the last such report;transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby or thereby; or
(jaa) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant agree to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategiestake, make any equity real estate investments (other than through restructuring commitments to take, or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor adopt any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus resolutions of the Company Board of Directors or of an Company Subsidiary stockholders in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practicesupport of, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)this Section 5.1.
Appears in 1 contract
Conduct of Business by the Company. Pending the Merger. The ----------------------------------------------------- Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including from the date of this Agreement until the Effective Time, unless Parent and Magellan shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure ScheduleAgreement:
(a) The business of the Company shall, and its Subsidiaries shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and Subsidiaries shall not permit take any Company Subsidiary toaction except in, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary practice and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringin compliance in all material respects with all applicable Legal Requirements;
(cb) The Company shall not make directly or indirectly do any material change of the following: (i) issue, sell, pledge, dispose of or encumber, or permit any Subsidiary of the Company to issue, sell, pledge, dispose of or encumber, (A) any capital stock of the Company or any of its Subsidiaries except for the redemption of the shares of Series "A" Preferred Stock outstanding as set forth in accounting methods Section 3.1(d) or practices(B) other than in the ordinary course of business and ------------- consistent with past practice and not relating to the borrowing of money, including without limitation any change assets of the Company or any of its Subsidiaries; (ii) amend or propose to amend the respective Organizational Documents of the Company or any of its Subsidiaries; (iii) split, combine or reclassify any outstanding capital stock, or declare, set aside or pay any dividend payable in cash, stock, property or otherwise with respect to establishment of reserves its capital stock whether now or hereafter outstanding, except for unearned premiumsdividends by the Company's Subsidiaries to the Company; (iv) redeem, losses (including without limitation incurred but not reported losses) and loss adjustment expensespurchase or acquire or offer to acquire, or permit any change of its Subsidiaries to redeem, purchase or acquire or offer to acquire, any of its or their capital stock except for the redemption of the Series "A" Preferred Stock as set forth in depreciation Section 3.1(d); or amortization policies (v) except in the ordinary course of -------------- business and consistent with past practice, enter into any contract, agreement, commitment or rates adopted by it, except as required by Applicable Law, GAAP or SAP;arrangement with respect to any of the matters set forth in this Section 6.1(b); -------------
(dc) The Company shall not, and shall not permit any Subsidiary of the Company Subsidiary to, (i) amend its charter incur any indebtedness for borrowed money or by-laws (unless contemplated hereby)guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any Subsidiary of the Company or guarantee any debt securities of other Persons other than indebtedness of the Company or any Subsidiary of the Company to the Company or any Subsidiary of the Company and other than in the ordinary course of business, (ii) incur make any individual Liability loans, advances or series of related Liabilities in excess of $200,000 capital contributions to, or investments in, any other Person, other than by the Company or any Subsidiary of the Company to or in the Company or any Subsidiary of the Company or (iii) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the case of clauses (ii) and (iii), loans, advances, capital contributions, investments, payments, discharges or satisfactions incurred or committed to in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;.
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fd) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Lawdisclosed on Schedule 4.16, the Company shall not, and ------------- shall not permit any Subsidiary of the Company Subsidiary to to, (i) adopt increase the compensation payable or implement, to become payable to any of its executive officers or commit to adopt employees or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend take any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than action with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, grant of any Liability in excess of $100,000 before the same comes due in accordance with its termsseverance or termination pay, in each caseor stay, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
bonus or other incentive arrangement (i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company benefit plans and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract policies in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) except any non-publicly traded securities in excess of $1,000,000 per transaction such increases or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or grants made in the ordinary course of business and consistent in accordance with past practice;.
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(pe) The Company shall deliver use reasonable efforts (i) to Parent as promptly as practicable after preserve intact the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf business organization of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status and each of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, its Subsidiaries; (ii) make a request for a tax ruling to maintain in effect any franchises, authorizations or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or similar rights of the Company and each of its Subsidiaries; (iii) with respect to any material Tax matter, change any keep available the services of its methods and their current officers and key employees; (iv) to preserve the goodwill of reporting income or deductions for federal income tax purposes from those employed in the preparation of having business relationships with it and its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable LawSubsidiaries;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Conduct of Business by the Company. The (a) From and after the date hereof until the date on which a majority of the Company’s directors are designees of Parent or Merger Sub or the date, if any, on which this Agreement is earlier terminated pursuant to Section 8.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) as may be consented to in writing by Parent, (iii) as expressly required by this Agreement, or (iv) as set forth on Section 6.1(a) of the Company Disclosure Schedule, the Company covenants and agrees as to itself and with Parent that the business of the Company and its Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only conducted in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, of business consistent with past practice and the Company and each Company Subsidiary its Subsidiaries shall use all their respective reasonable best efforts to preserve their business organizations intact its present business organization and preserve its regular services to, and maintain its relationships withexisting relations and goodwill with Governmental Entities, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokerssuppliers, suppliers employees and all others having business dealings with it;associates.
(b) Except as contemplated by this AgreementSubject to the exceptions contained in clauses (i) through (iv) of Section 6.1(a), the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the date on which a majority of the Company’s directors are designees of Parent or Merger Sub, without the prior written consent of Parent, the Company:
(i) shall not, and shall not permit any Company Subsidiary of its Subsidiaries that is not wholly-owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries);
(ii) shall not, and shall not permit any of its Subsidiaries to, merge or consolidate with any other person, except for any such transactions among wholly-owned Subsidiaries of the Company, or restructure, reorganize or completely or partially liquidate;
(iii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose to make the issuance of any change other securities in its dividend practices or policies respect of, in lieu of or in substitution for shares of its underwritingcapital stock, pricingexcept for any such transaction by a wholly-owned Subsidiary of the Company which remains a wholly-owned Subsidiary after consummation of such transaction;
(iv) shall not, claimsand shall not permit any of its Subsidiaries to, risk retention, investment, reinsurance practices acquire assets outside of the ordinary course of business from any other person with a value or policies purchase price in the aggregate in excess of $100,000 in any material respect; transaction or series of related transactions, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement and set forth on the Company agrees that it will notify Parent Disclosure Schedule;
(v) except as required by existing written agreements or Company Benefit Plans in effect prior to the date of this Agreement and provide Parent listed in the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to any employees, consultants, present or former directors or officers of the Company or any of its Subsidiaries, except, with information in reasonable detail regarding any material transactions (excluding investment transactions respect to employees only, for increases in the ordinary course of business consistent with past practice, but including transactions involving (B) except as otherwise required by applicable Law and for agreements entered into in the securitization ordinary course of Assets business consistent with past practice (other than agreements entered into with any director or officer or any former employee of the Company or any Company Subsidiary), enter into any new employment, change of control, severance or retention agreement with any employee of the Company or any of its Subsidiaries, (C) establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any present or former directors, officers or employees or any of their beneficiaries, (D) grant any equity or equity-based awards (including Shares, preferred shares or any other securities of the Company Subsidiary and transactions involving derivative securitiesor any of its Subsidiaries or awards thereof), whether involving a purchase (E) accelerate the vesting or salepayment of any compensation payable or benefits to become payable or provided to any employees, that it consultants, present or former directors or officers of the Company or any of its Subsidiaries or (F) terminate or materially amend any existing, or adopt any new, Company Subsidiary is seriously consideringBenefit Plan, other than changes made in the ordinary course of business consistent with past practice that do not materially increase the costs of any such Company Benefit Plan;
(cvi) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, enter into or make any loans, advances or capital contributions to or investments in (iA) amend its charter officers, directors, employees, agents or byconsultants, in the case of this clause (A) other than advances of expenses in the ordinary course of business consistent with past practice or (B) any other person (other than the Company or any direct or indirect wholly-laws (unless contemplated hereby), (iiowned Subsidiary) incur any individual Liability or series of related Liabilities in excess of $200,000 100,000 in the aggregate, in the case of this clause (B) other than loans, advances, capital contributions or investments made pursuant to Contracts to the extent in effect as of the date hereof that are set forth in the Company Disclosure Schedule or extensions of credit and accounts receivable to customers or unrelated third parties in the ordinary course of business consistent with past practice; and provided that, in any event, the Company shall update Parent and Merger Sub in writing on a bi-weekly basis with respect to the purpose, amount and timing of the making of any such loans or advances relating to indemnification obligations owed to any present or former director, officer or employee of the Company;
(vii) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, or revalue any of its material assets (including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business consistent with past practice), (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 daysexcept as required by, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Personconform to, (vii) enter into any contract relating to GAAP, SEC rule or policy, applicable Law or as a result of or arising from the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, Restatement and Related Matters;
(viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries to, settle any litigation or any other Personproceedings before a Governmental Entity or otherwise for an amount in excess of $100,000, individually, or $200,000 in the aggregate;
(gix) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make adopt any capital expenditures amendments to its articles of organization or expenditures bylaws or commitments similar applicable charter documents;
(x) except for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for among the Company and its wholly-owned Subsidiaries or among the Company Subsidiaries taken as a whole exceed $200,000Company’s wholly-owned Subsidiaries, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize or propose the issuance, sale, pledge, disposition, grant or encumbrance of, any rights with a value shares of its capital stock or other ownership interests in excess of $100,000 the Company or any other rights which are material Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any contract such shares of capital stock, ownership interest or make convertible or exchangeable securities or take any payment, direct action to cause to be exercisable any otherwise unexercisable Company Stock Option under any existing Company Stock Plan (except as otherwise provided by the terms of this Agreement or indirect, the express terms of any Liability unexercisable options outstanding on the date hereof), other than (A) issuances of Shares in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision respect of any Insurance Contract to permit exercise of Company Stock Options and settlement of any Restricted Shares outstanding on the date hereof, and (B) the acquisition of Shares from a cash-out thereof;holder of a Company Stock Option or Restricted Shares in satisfaction of withholding obligations or in payment of the exercise price.
(ixi) The except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not, and shall not permit any Company Subsidiary of its material Subsidiaries to, other than pursuant to the operation of separate accounts in the ordinary course of businessdirectly or indirectly, consistent with existing strategiespurchase, (i) sell, lease, mortgage, encumber redeem or otherwise grant acquire any interest in or dispose of any shares of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset capital stock or any contract relating thereto which is material rights, warrants or options to the financial condition of the Company, acquire any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportshares;
(jxii) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, enter into waive any material contract or stock repurchase rights, accelerate, amend or waive any material provision change the period of any material contract which would involve the payment by the Company exercisability of options or restricted stock, or reprice options granted under any Company Subsidiary of $200,000 Stock Plans or moreauthorize cash payments in exchange for any options granted under any Company Stock Plans;
(lxiii) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, settle incur, assume, guarantee, prepay or compromise otherwise become liable for any claim in indebtedness (directly, contingently or otherwise), including capital leases, except for (A) any action, proceeding or investigation which could result in an expenditure indebtedness for borrowed money among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, (B) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 6.1(b) and (C) indebtedness not to exceed $200,000 in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with clauses (A) or (B);
(xiv) shall not make or authorize capital expenditures in excess of $200,000110% of the budgeted capital expenditure amount set forth in Section 6.1(b)(xiv) of the Company Disclosure Schedule, which expenditures shall be consistent in timing with past practice, provided that nothing herein shall prohibit any capital expenditure required pursuant to existing Contracts;
(mxv) The except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, purchase sell, lease, license, transfer, exchange or swap, mortgage or otherwise acquireencumber (including pursuant to a sale-leaseback transaction or securitization), or subject to any material Lien (other than Permitted Liens) or otherwise dispose of any of its material properties or assets (other than Company IP), including the capital stock of Subsidiaries, except pursuant to a contract existing Contracts in effect on prior to the date execution of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except Agreement and set forth in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingsCompany Disclosure Schedule;
(nxvi) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, enter into sell, transfer, lease, license, mortgage, encumber or otherwise dispose of (including pursuant to a sale-leaseback transaction or securitization) any new, or materially amend or terminate Company IP to any existing, reinsurance contracts or arrangementsperson, except pursuant to existing Contracts in accordance effect prior to the execution of this Agreement or pursuant to Contracts in respect of nonexclusive licenses of Company IP with existing reinsurance agreements or customers entered into in the ordinary course of business on terms and conditions consistent with past practice;
(oxvii) The Company shallshall not, and shall cause each Company Subsidiary not permit any of its Subsidiaries to, maintain uninterrupted enter into any Contract that would have been a Company Material Contract had it been entered into prior to the execution of this Agreement;
(xviii) shall not, and shall not permit any of its existing Subsidiaries to, modify, amend, terminate, release, assign or waive any material rights under any Company Material Contract;
(xix) shall not, and shall not permit any of its Subsidiaries to, enter into any collective bargaining agreement or other labor agreement;
(xx) shall not, and shall not permit any of its Subsidiaries to, cancel or fail to renew, without reasonable substitutes, any material insurance coverage policy naming the Company or any of all types its Subsidiaries as a beneficiary or loss payee;
(xxi) shall not, and shall not permit any of its Subsidiaries to, take any action to render inapplicable, or to exempt any third party from, any standstill arrangements, the provisions of any Takeover Law or the Rights Agreement;
(xxii) shall not, and shall not permit any of its Subsidiaries to, change its cash management policies, including accelerating the collection of accounts receivable or deferring the payment of accounts payable;
(xxiii) shall not, and shall not permit any of its Subsidiaries to, (A) except as required by Law, make any change (or file any such change) in effect any method of Tax accounting for a material amount of Taxes or procure substantially similar substitute insurance policies (B) make, change or rescind any material Tax election, settle or compromise any material Tax liability, file any amended Tax Return involving a material amount of additional Taxes (except as required by Law), enter into any closing agreement relating to a material amount of Taxes, or 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, in each case, consistent with financially sound past practice;
(xxiv) shall not, and reputable insurance companies shall not permit any of its Subsidiaries to, (A) take any action that would reasonably be likely to prevent or materially delay satisfaction of the Tender Offer Conditions or the conditions contained in at least such amounts and against such risks as are currently covered by such policies if such coverage is availableSection 7.1 or the consummation of the Merger, except for insurance coverage the failure as permitted by Section 6.3, or (B) take any action that would have or would reasonably be expected to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(txxv) Neither the Company nor shall not, and shall not permit any Company Subsidiary shall of its Subsidiaries to, agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company Pending the Closing.
(a) Except as contemplated by this Agreement, each Seller covenants and agrees as to itself that, during the period between the date of this Agreement and through and including the date on which the Closing occurs, unless the Purchaser shall otherwise agree in writing, the Business shall be conducted only in, and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheldtake any action except in, the ordinary course of business and in a manner consistent with past practice. Each Seller will not take, and each Seller will not permit the Company to take, any action that either Seller knows or should know would cause any representation or warranty made by either Seller in this Agreement to become untrue in any material respect.
(b) By way of amplification and not limitation, except as otherwise expressly permitted or contemplated by this Agreement or as set forth on Schedule 5.01(b) of the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, between the date of this Agreement and shall not permit any Company Subsidiary tothe date on which the Closing occurs, make directly or indirectly do, or propose to make do, any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or following without the prior written consent of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;the Purchaser:
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend or otherwise change its charter Articles of Incorporation or byBy-laws (unless contemplated hereby), laws;
(ii) incur any individual Liability issue, sell, pledge, dispose of, grant, encumber, or series of related Liabilities in excess of $200,000 other than in authorize the ordinary course of business consistent with past practiceissuance, sale, pledge, disposition, grant or encumbrance of, (iii1) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests incapital stock of any class of the Company, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of or interests insuch capital stock, or to receive any payment based on other ownership interest (including, without limitation, any phantom interest), of the value ofCompany, or (2) any assets of the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure ScheduleCompany, (y) except for sales in the ordinary course of business and in a manner consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, ;
(iii) increase declare, set aside, make or pay any dividend of other distribution, payable in cash, stock, property or otherwise, with respect to any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, capital stock;
(iv) increase by more than 5% the aggregate number of its employeesreclassify, (v) pay combine, split, subdivide or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary toredeem, purchase or otherwise acquire, except pursuant to a contract in effect on the date directly or indirectly, any of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingsits capital stock;
(n1) The Company shall notacquire (including, and shall not permit any Company Subsidiary towithout limitation, enter into any newby acquisition, consolidation, or materially amend acquisition of stock or terminate assets) any existingcorporation, reinsurance contracts partnership, other business organization or arrangementsany division thereof or any material amount of assets; (2) incur any indebtedness for borrowed money including, without limitation, request an advance or draw down on any existing debt facility, or issue any debt securities or assume, guarantee or endorse, or as an accommodation or otherwise become responsible for, the obligations of any person, or make any loans or advances, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
; (o3) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement any contract or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other agreement other than in the ordinary course of business and business, consistent with past practice, neither ; (4) authorize any single capital expenditure of which is in excess of $50,000 or capital expenditures for the Company nor which exceed $150,000 in the aggregate; or (5) enter into or amend any Company Subsidiary shall declarecontract, agreement, commitment or arrangement with respect to any matter set aside or pay any dividends or distributions (whether forth in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; andthis Section 5.01(b)(v);
(tvi) Neither subject to Section 5.01(b)(iii) above, increase the Company nor compensation payable or to become payable or the commission structure applicable to its officers or employees, or grant any Company Subsidiary shall agreeseverance or termination pay to, in writing or otherwise, to take enter into any of the actions prohibited by the foregoing clauses (a) through (s).employment or
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including during the Effective Timeperiod from the date of this Agreement until this Agreement is terminated by its terms, unless Parent the Offeror shall otherwise consent in writing, which writing (such consent shall not to be unreasonably withheld, delayed or conditioned), and except as otherwise (i) expressly permitted or specifically contemplated by this Agreement or as set forth on the Company Disclosure ScheduleLetter, or (ii) required by Law:
(a) The the business of the Company shall be conducted only in, and the Company shall not take any action except in, the ordinary course of business and the Company shall, and shall cause each Company Subsidiary toits subsidiaries and its and their Representatives, conduct to use commercially reasonable efforts to maintain and preserve its business only organization and goodwill and assets (including the Company Mineral Rights), to keep available the services of its directors, officers and employees, to maintain satisfactory relationships with suppliers, distributors, customers, employees and others having key business relationships with them; and shall not make any change in the business, assets, liabilities, operations, capital or affairs of the Company or its subsidiaries other than changes in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itof business;
(b) Except as contemplated the Company will not declare, set aside or pay any dividend or other distribution or payment (whether in cash, shares or property) in respect of the Common Shares or other Convertible Securities owned by this Agreementany Person;
(c) without limiting the generality of Section 5.1(a), the Company shall not, and shall not directly or indirectly, do or permit to occur any of the following:
(i) amend any Company Subsidiary toOrganizational Documents;
(ii) amend the Company’s Stock Option Plan or the Company’s RSU Plan or the terms of any of its outstanding securities (except to provide for the accelerated vesting of Options in accordance with the provisions of the Company’s Stock Option Plan or the exercise, make cancellation or propose surrender of Options as contemplated in Section 2.9(a) or Section 2.9(b)), including any outstanding indebtedness and credit facilities;
(iii) issue, sell or pledge or agree to issue, sell or pledge any Common Shares or other Convertible Securities other than Common Shares issuable upon exercise of the Convertible Securities outstanding at the date of this Agreement;
(iv) redeem, purchase or otherwise acquire any of its outstanding Common Shares or other Convertible Securities;
(v) split, consolidate or reclassify any of its Common Shares or other Convertible Securities;
(vi) adopt a plan of liquidation or resolutions providing for the liquidation, dissolution, merger, consolidation or reorganization of the Company;
(vii) reorganize, amalgamate or merge the Company with any other Person;
(viii) sell, lease, pledge, dispose of or encumber any assets, except in the ordinary course of business;
(ix) acquire (by merger, amalgamation, consolidation, acquisition of shares or assets or otherwise) another Person or division thereof or make any change investment either by purchase of shares or securities, contribution of capital, property transfer or purchase of any property or assets of any other Person or division thereof;
(x) incur, extend, renew or replace any indebtedness or any other material liability or obligation except in its dividend practices the ordinary course of business or policies issue any debt securities or assume, guarantee, endorse or otherwise become responsible for, the obligations of any other Person (other than in its underwritingrespect of the Company) or make any loans or advances, pricing, claims, risk retention, investment, reinsurance practices except for fluctuations in working capital in the ordinary course of business;
(xi) expend or policies commit to expend any amounts with respect to capital expenditures in any material respect; and excess of $100,000 individually or $250,000 in the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions aggregate except for commitments under Material Contracts or in the ordinary course of business consistent with past practice, but including transactions involving budgets presented to the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringOfferor;
(cxii) The Company shall not make pay, discharge or satisfy any material change in accounting methods claims, liabilities or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 obligations other than the payment, discharge or satisfaction in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms Material Contracts or liabilities reflected or reserved against in the Financial Statements or of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on liabilities incurred since the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual latest Financial Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practiceexcept for the payment of the transaction fees and expenses of legal and financial advisors of the Company, provided that in the case of the financial advisor agreement disclosed to the Offeror prior to the date hereof, the Company does not amend the transaction fees and expenses payable thereunder;
(oxiii) The Company shallexcluding investments of available cash in short-term bankers’ acceptances and similar investments, and shall cause each Company Subsidiary toenter into any xxxxxx, maintain uninterrupted its existing insurance coverage of all types in effect swaps, or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effectother financial instruments or like transactions;
(pxiv) The voluntarily enter into, terminate, waive, modify, amend or release any Person from any obligation under any Material Contract, or under, or in respect of, the Shareholder Rights Plan;
(xv) make any changes in financial or tax accounting methods, principles, policies or practices, except as required by GAAP or by Law;
(xvi) enter into any Contracts or other transactions with any officer or director of the Company, or any Person who owns 10% or more of any outstanding class of voting securities of the Company;
(xvii) enter into any transaction or perform any act which might interfere with or be materially inconsistent with the successful completion of any of the Contemplated Transactions or which would render, or which reasonably may be expected to render, inaccurate any of the Company’s representations and warranties set forth in this Agreement or materially interfere with the completion of the Contemplated Transactions;
(xviii) settle any action, claim or proceeding brought (i) against it or (ii) by any present or former holder of its securities or any other Person in connection with the Contemplated Transactions, provided that the Company may settle any such action, claim or proceeding that has a value of less than $100,000, provided that the Offeror shall be given notice of the commencement of any action by the Company; or
(xix) authorize or propose any of the foregoing, or enter into or modify any Contract to do any of the foregoing;
(d) the Company shall deliver use its commercially reasonable efforts to Parent as promptly as practicable after cause the filing thereof with applicable regulatory authorities, unaudited current insurance (or audited, as the case may be, SAP Statements filed by or on behalf re-insurance) policies of the Company not to be cancelled or terminated or any Company Subsidiary after of the date hereofcoverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies providing coverage similar to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect;
(qe) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) duly and timely file all Tax Returns required to be filed by it on or after the date hereof and all such Tax Returns will be true, complete and correct in all material respects; (ii) timely withhold, collect, remit and pay all Taxes which are to be withheld, collected, remitted or paid by it to the extent due and payable except for any Taxes contested in good faith pursuant to applicable Laws; (iii) not make or rescind any material express or deemed election relating to Taxes, ; (iiiv) not make a request for a tax ruling or enter into a Tax Ruling closing agreement with any taxing authorities; (as defined below), settlement v) not settle or compromise with respect to any material Tax matterclaim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes; and (iiivi) with respect to not change in any material Tax matter, change respect any of its methods of reporting income income, deductions or deductions accounting for federal income tax purposes from those employed in the preparation of its federal income tax return for the tax year for which it last filed its Tax Return for under the taxable year ending December 31, 1999Tax Act, except as may be required by Applicable Lawapplicable Laws;
(sf) Other the Company shall duly and timely file all material forms, reports, schedules, statements and other documents required to be filed pursuant to any applicable corporate Laws or Securities Laws;
(g) the Company shall use its commercially reasonable efforts, in consultation with the Offeror, to duly and timely file all material forms, reports, schedules, statements and other documents and take all other steps within its power and control that are required by applicable Law to maintain valid, satisfactory title and good standing in respect of all mineral claims and mining leases held by the Company;
(h) the Company shall promptly notify the Offeror orally and in writing of (i) any material change (within the meaning of the Securities Act), on a consolidated basis, in the operation of its business or in the operation of its properties and of any material governmental or third party complaints, investigations or hearings (or communications indicating that the same may be contemplated); and (ii) the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would or would be likely to (x) cause any of the representations or warranties of the Company contained herein to be untrue or inaccurate in any material respect; or (y) result in the failure in any material respect of the Company to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied prior to the Effective Time;
(i) the Company shall not create any new Officer Obligations and the Company shall not grant to any officer, director or employee an increase in compensation in any form, make any loan to any officer, director or employee, or take any action with respect to the grant of any severance or termination pay arising from the Offer or a change of control of the Company or enter into any employment agreement with, any officer, director or employee (other than in the ordinary course of business and course, consistent with past practicebudgets presented to the Offeror prior to the date of this Agreement), neither or enter into any other agreement with respect to any increase of benefits payable under its current severance or termination pay or any other policies, other than to permit the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether accelerated vesting of Options and RSUs in cash, stock or property) in respect of any capital stock accordance with the provisions of the Company Company’s Stock Option Plan and the Company’s RSU Plan, as applicable, or any Company Subsidiary the exercise, cancellation or redeem, purchase surrender of Options as contemplated in Section 2.9(a) or otherwise acquire any of the capital stock of the Company or any Company SubsidiarySection 2.9(b); and
(tj) Neither the Company nor shall not adopt or amend or make any Company Subsidiary shall agreecontribution to any bonus, in writing profit sharing, option, pension, retirement, deferred compensation, insurance, incentive compensation, other compensation or otherwiseother similar plan, agreement, trust, fund or arrangements for the benefit of employees except: (i) with respect to take its obligations under existing provisions of any of the actions prohibited by Employee Plans; (ii) to accelerate vesting of Options in accordance with the foregoing clauses provisions of the Company’s Stock Option Plan; and (aiii) through (s)to give effect to Section 2.8 hereof.
Appears in 1 contract
Conduct of Business by the Company. (a) The Company covenants and agrees as to itself that, between the date of this Agreement and the Company Subsidiaries thatearlier to occur of the Merger Effective Time and the date, at all times up if any, on which this Agreement is terminated pursuant to and including Section 9.1 (the Effective Time“Interim Period”), unless except (i) to the extent required by Law, (ii) as may be consented to in advance in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise may be expressly contemplated, required or expressly permitted or contemplated by this Agreement Agreement, or (iv) as set forth on in Schedule 6.1 of the Company Disclosure Schedule:
(a) The Letter, the Company shall, and shall cause each Subsidiary of the Company Subsidiary to, (A) conduct its business only in all material respects in the ordinary course and in substantially the same a manner as heretofore conducted since December 31, 1999consistent with past practices, and the Company and each Company Subsidiary shall (B) use all reasonable efforts to (1) preserve intact its present current business organization organization, goodwill, ongoing businesses and significant relationships with tenants and other third parties, (2) retain the services of its current officers at the level of vice president or higher, (3) preserve its regular services to, assets and properties in good repair and condition (normal wear and tear excepted) and (4) maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;the status of the Company as a REIT.
(b) Except Without limiting the foregoing, the Company covenants and agrees that, during the Interim Period, except to the extent required by Law, as contemplated may be consented to in advance in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly contemplated, required or expressly permitted by this Agreement, or as set forth in Schedule 6.1 of the Company Disclosure Letter, the Company shall not, and shall not cause or permit any Subsidiary of the Company Subsidiary to, make do any of the following:
(i) (A) amend or propose to amend the Company Governing Documents or, other than in the ordinary course of business, such equivalent organizational or governing documents of any Subsidiary of the Company, in each case, whether by merger, consolidation or otherwise, (B) reinitiate, or amend in a manner material to the Company, the Distribution Reinvestment Plan or the Share Redemption Program, or (C) waive the stock ownership limit or create (or increase) an Excepted Holder Limit (as defined in the Company Charter) under the Company Charter;
(ii) adjust, split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of any Acquired Company (other than any Wholly Owned Company Subsidiary);
(iii) declare, set aside or pay any dividend on or make any change other actual, constructive or deemed distributions (whether in cash, stock, property or otherwise) with respect to Company Capital Stock or other equity securities or ownership interests in any Acquired Company or otherwise make any payment to its or their stockholders or other equity holders in their capacity as such, except for (A) the declaration and payment by the Company of regular quarterly dividends for the first and second quarters of 2022 on shares of Company Common Stock in accordance with past practice; provided, that, the Company shall ensure that (1) the record date with respect to any such quarterly dividend practices shall be consistent with historical record dates from fiscal year 2021 or policies if such date is not a Business Day, the next day that is a Business Day and (2) any such individual quarterly dividend on shares of Company Common Stock shall not exceed $0.07 per share, (B) the declaration and payment of dividends or other distributions to the Company by any Wholly Owned Company Subsidiary, (C) distributions by any Subsidiary of the Company that is not wholly owned, directly or indirectly, by the Company, in accordance with the requirements of the organizational documents of such Subsidiary, and (D) distributions resulting from the vesting or settlement of Company Compensatory Awards in existence as of the date hereof or issued after the date hereof in accordance with this Agreement; provided, that, notwithstanding the restriction on dividends and other distributions in this Section 6.1(b), the Company and any Subsidiary of the Company shall be permitted to make distributions in accordance with Section 7.11;
(iv) redeem, repurchase or otherwise acquire, directly or indirectly, any shares of Company Capital Stock or any other equity interests of the Company or any Subsidiary of the Company, except for shares of Company Capital Stock withheld by, or forfeited to, the Company in connection with the vesting and settlement of taxes for outstanding Company Compensatory Awards in the ordinary course;
(v) except for transactions among the Company and one or more Wholly Owned Company Subsidiaries or among one or more Wholly Owned Company Subsidiaries, issue, sell, pledge, dispose, permit any Lien (other than Permitted Liens) on or grant any shares of Company Capital Stock or any other equity interests in the Company or the Subsidiaries of the Company or any options, warrants, convertible securities or other rights of any kind to acquire any shares of (or any rights linked to the value of) Company Capital Stock or any other equity interests in the Company or in its underwritingthe Subsidiaries of the Company, pricingor enter into any agreement, claimsarrangement or understanding with respect to the sale, risk retentionregistration or voting of the Company Capital Stock or any other equity interests in the Company or in the Subsidiaries of the Company;
(vi) acquire or agree to acquire (whether by merger, investmentconsolidation, reinsurance practices acquisition of stock or policies assets, or otherwise) any assets or interest in any material respect; and Person, except (A) acquisitions by the Company agrees that it will notify Parent or any Wholly Owned Company Subsidiary of or from an existing Wholly Owned Company Subsidiary and provide Parent with information (B) other acquisitions of personal property and equipment in reasonable detail regarding the ordinary course of business for a purchase price of less than $3,000,000 in the aggregate;
(vii) except as described in Schedule 6.1(b)(vii) of the Company Disclosure Letter or as permitted by clause (viii) below, sell, mortgage, pledge, lease, license, assign, transfer, abandon, dispose of or permit any material transactions Lien on, or effect a deed in lieu of foreclosure with respect to, any real property or any other material property, material rights or material assets, except pursuant to residential leases for multifamily units, Permitted Liens incurred in the ordinary course of business;
(excluding investment transactions viii) incur, create, assume, guarantee, refinance, replace or prepay any Indebtedness for borrowed money or issue or materially amend the terms of any Indebtedness of the Acquired Companies, except (A) Indebtedness incurred under the Company’s existing Debt Facilities in the ordinary course of business (including to the extent necessary to pay dividends permitted by Section 6.1(b)(iii)) that does not, in the aggregate, exceed $5,000,000); (B) repayments under the existing Debt Facilities in the ordinary course of business consistent with past practicepractice (specifically excluding the loans secured directly or indirectly by any Company Property) and (C) mandatory payments under the terms of any Indebtedness in accordance with its terms;
(ix) make any loans, but advances or capital contributions to, or investments in, any other Person (including transactions involving the securitization to any of Assets its officers, directors, Affiliates, agents or consultants) or make any change in its existing borrowing or lending arrangements for or on behalf of such Persons, other than by the Company or of any a Wholly Owned Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any a Wholly Owned Company Subsidiary;
(f) Except (x) enter into, renew, modify, amend or terminate, or waive, release, compromise or assign any rights or claims under, any Material Contract (or any Contract that, if existing as of the date hereof, would be a Material Contract), other than any termination or renewal in accordance with the terms of any existing Material Contract that occurs automatically without any action by any Acquired Company; provided, however, that if Parent fails to respond to the Company’s written request for approval of any such action (which response may include a request for additional information) within 48 hours of receipt of any such request made to each of the Persons set forth on Schedule 6.1(b)(x) of the Company Disclosure Letter in the manner set forth in Section 10.2, Parent shall be deemed to have given its written consent to such action;
(xi) except as set forth in Schedule 6.1(b)(xi) of the Company Disclosure ScheduleLetter, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess liability of $100,000 any Acquired Company before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts (A) in the ordinary course of business, consistent or (B) in connection with existing strategies, (i) sell, lease, mortgage, encumber dispositions or otherwise grant any interest in or dispose refinancings of any Indebtedness otherwise permitted hereunder;
(xii) waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that (A) with respect to the payment of its Assets whichmonetary damages, involve only the payment of monetary damages (excluding any portion of such payment payable under an existing property-level insurance policy) that do not exceed $2,000,000 individually or $5,000,000 in the aggregate, are material to (B) do not involve the financial condition imposition of injunctive relief against any Acquired Company or the Surviving Entity, (C) do not provide for any admission of liability by any of the CompanyAcquired Companies, and (D) with respect to any Action involving any present, former or purported holder or group of holders of Company SubsidiaryCommon Stock comply with Section 7.7(c) (excluding in each case any such matter related to Taxes, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Lienswhich, for Permitted Liens the avoidance of doubt, shall be covered by Section 6.1(b)(xvi));
(xiii) except as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in Schedule 6.1(b)(xiii) of the Company Disclosure Schedule; and the Company shall furnish Letter, (A) hire or, except where due to Parent a monthly reportcause, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets terminate any officer of the Company or increase employee headcount by more than 3%, (B) increase in any Company Subsidiary which took place since manner the last such report;
(j) The Company agrees that it shall notamount, nor shall it permit any Company Subsidiary to, other than pursuant to the operation rate or terms of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring compensation or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization benefits of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company Acquired Companies’ directors, officers or of an Company Subsidiary employees, except for increases in an amount of $250,000 annual compensation or more;
(k) Other than wage rate in the ordinary course of business consistent or as required under any Company Benefit Plan set forth on Schedule 4.17(a) of the Company Disclosure Letter or as may be required to comply with past practiceapplicable Law, (C) enter into, adopt, amend or terminate any employment, bonus, severance or retirement Contract or Company Benefit Plan (or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Benefit Plan if it were in existence as of the date of this Agreement) or other compensation or employee benefits arrangement, except in the ordinary course in conjunction with annual Employee Benefit Plan renewals or as may be required to comply with applicable Law, (D) grant to any of the Acquired Companies’ directors, officers or employees any new or additional entitlement to severance or termination pay or any other payments or benefits triggered by a change of control or by the transactions contemplated by this Agreement or (E) recognize any union or other labor organization as the representative of any of the employees of the Company, or enter into collective bargaining agreement with any labor organization;
(xiv) make any material change to its methods, principles or procedures of accounting in effect as of December 31, 2020, except as required by a change in GAAP or in applicable Law, or make any change with respect to accounting policies, principles or practices, in each case, except for such changes that are required by GAAP, the SEC or applicable Law, or as otherwise specifically disclosed in the Company shall notSEC Documents filed prior to the date hereof;
(xv) enter into any new line of business;
(xvi) enter into or modify in a manner adverse to any Acquired Company, and shall not permit or take (or fail to take) any Company Subsidiary action that would violate, be inconsistent with, or give rise to liability with respect to, any Tax Protection Agreement, make, change or rescind any entity classification or other material election relating to Taxes, change a material method of Tax accounting, change any Tax accounting period, file or amend any material Tax Return, settle or compromise any material Tax liability, audit, claim or assessment, enter into any material contract or amend or waive closing agreement related to Taxes, knowingly surrender any right to claim any material provision Tax refund, or give or request any waiver or extension of a statute of limitation with respect to any material contract which would involve the payment by the Company Tax Return or any Company Subsidiary of $200,000 Tax claim or more;
(l) Other than assessment except, in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreementeach case, (iA) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets to the extent required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditby Law, or (ivB) any real property or mortgage investments except in to the ordinary course of managing extent necessary, as reasonably determined after consultation with Parent, (1) to preserve the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any newCompany’s qualification as a REIT under the Code, or materially amend (2) to qualify or terminate preserve the status of any existing, reinsurance contracts Subsidiary of the Company as a disregarded entity or arrangements, except in accordance with existing reinsurance agreements partnership for U.S. federal income tax purposes or in as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the ordinary course applicable provisions of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage Section 856 of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or auditedCode, as the case may be;
(xvii) take any action that would, SAP Statements filed or fail to take any action, the failure of which to be taken would, reasonably be expected to cause the Company to fail to qualify as a REIT or any Subsidiary of the Company to cease to be treated as any of (A) a partnership or disregarded entity for federal income tax purposes, or (B) a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be;
(xviii) make or commit to make any capital expenditures other than (A) within the applicable thresholds set forth on Schedule 6.1(b)(xviii) of the Company Disclosure Letter, (B) to address obligations required under existing Contracts or (C) for emergency repairs required by Law;
(xix) adopt a plan of merger, complete or on behalf partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization;
(xx) materially modify or reduce the amount of any insurance coverage provided by the Insurance Policies;
(xxi) make any material adverse change to their publicly posted privacy policies or the operation or security of their IT Assets, except as required by applicable Law;
(xxii) (A) initiate or consent to any zoning reclassification of any Company Property, or any change to any approved site plan, special use permit or other land use entitlement affecting any Company Property or (B) amend, modify or terminate, or fail to use commercially reasonable efforts to avoid the lapse of, any Permit of the Company or any its Subsidiaries, in each case of clauses (A) and (B) except as would not reasonably be expected to materially adversely impair the current use, operation or value of the subject Company Subsidiary after the date hereofProperty;
(qxxiii) The Company shall not, nor shall except as set forth in Schedule 6.1(b)(xxiii) of the Company permit Disclosure Letter, apply for or receive any relief under the COVID-19 Laws; or
(xxiv) authorize or enter into any Contract to do any of the foregoing.
(c) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company Subsidiary tofrom taking any action, take at any actions time or from time to time, that would be in the reasonable judgment of the Company Board (or any committee thereof), upon advice of counsel to the Company, is reasonably likely necessary (i) after consultation with Parent, for the Company to adversely affect avoid or to continue to avoid incurring entity level income or excise Taxes under the Code or to maintain its qualification as a REIT under the Code or otherwise to qualify or preserve the status of the Merger as a reorganization under Section 368 any Subsidiary of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes as a partnership, disregarded entity, Qualified REIT Subsidiary or Taxable REIT Subsidiary for any period or portion thereof ending on or prior to the Closing Date, or (ii) to establish or maintain any exemption from those employed or otherwise avoid the imposition of any requirement that any of the Acquired Companies be registered as an investment company under the Investment Company Act, including in the preparation case of its federal income Tax Return for the taxable year ending December 31clause (i) only, 1999making dividend or any other actual, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside constructive or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock deemed distribution payments to stockholders of the Company as permitted pursuant to Section 6.1(b)(iii) or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)Section 7.11.
Appears in 1 contract
Conduct of Business by the Company. (a) The Company covenants and agrees as to itself that, between the date of this Agreement and the Effective Date, except as required by a Governmental Authority of competent jurisdiction or as may be required in order for the Company Subsidiaries that, at all times up and Parent to and including the Effective Timecomply with applicable Laws, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(ai) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary its Subsidiaries shall use all reasonable efforts to preserve intact its present only conduct their business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business and in a manner consistent with past practice; and
(ii) the Company shall maintain its existence and good standing and use its best efforts to preserve substantially intact the business organization of the Company and its Subsidiaries, but including transactions involving to keep available the securitization services of Assets the current officers, employees and consultants of the Company and its Subsidiaries and to preserve the current relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any Company Subsidiary has business relations.
(b) By way of amplification and not limitation, except as expressly contemplated by any other provision of this Agreement or as required by a Governmental Authority of competent jurisdiction or as may be required in order for the Company and Parent to comply with applicable Laws, neither the Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Date, directly or indirectly, do any of the following without the prior written consent of Parent:
(i) amend or otherwise change its certificate of incorporation or by-laws or equivalent organizational documents;
(ii) issue, sell, pledge, assign, license or sub-license, 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 of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesSubsidiary, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Lawwarrants, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement convertible securities or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests insuch capital stock, or to receive any payment based on other ownership interest (including, without limitation, any phantom interest), of the value of, the capital stock of or other equity interests in Company or any securities convertible into Company Subsidiary (except for the issuance of shares of Company Common Stock issuable pursuant to the conversion of the Company Debentures pursuant to Section 6.11 and the issuance of shares of Company Common Stock upon the exercise of Company Warrants, provided the Company complies with Section 6.10) or (B) any capital stock properties or assets of or other equity interests in the Company or any Company Subsidiary;
(fiii) Except (x) except as set forth out in Section 6.09, accelerate, amend or change the period of exercisability of Company Disclosure ScheduleStock Options, re-price Company Stock Options, authorize cash payments in exchange for any Company Stock Options, permit any holder of Company Stock Options to exercise any Company Stock Options or issue any shares of Company Common Stock upon the exercise of Company Stock Options;
(yiv) 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;
(v) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock or other securities;
(vi) (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 or any material amount of assets except in the ordinary course of business and consistent with past practicepractice as approved in prior writing by Parent; (B) incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or (z) as required by the terms of agreements or plans already in effect or Applicable Lawotherwise become responsible for, the Company shall not, and shall not permit obligations of any Company Subsidiary to (i) adopt or implementperson, or commit to adopt make any loans or implementadvances, or materially amend, grant any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase security interest in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than assets except in the ordinary course of business and consistent with past practicepractice as approved in prior writing by Parent; (C) authorize, the Company shall not, and shall not permit any Company Subsidiary to, or make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than commitment with respect to Investment Assets) capital expenditures which in one or a series of related transactions exceed $100,000 or which are, in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000aggregate, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 25,000 from the date hereof until the earlier of (x) the Effective Time or (z) the termination of this Agreement pursuant to Article VIII; or (D) enter into or amend any other rights which are material contract, agreement, commitment or arrangement with respect to any contract or make any payment, direct or indirect, of any Liability matter set forth in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereofthis Section 5.01(b)(vi);
(ivii) The hire or terminate any employee or service provider except as expressly provided in this Agreement;
(viii) increase the compensation payable or to become payable or the benefits provided to its directors, officers, consultants, service providers or employees, or grant any severance or termination pay to or enter into any employment or severance agreement with, any director, officer, consultant, service provider or other employee of the Company shall not, and shall not permit or of any Company Subsidiary toSubsidiary, or establish, adopt, enter into or amend any 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, consultant, service provider or employee;
(ix) change any of the accounting principles used by it, other than as required by GAAP;
(A) make, change or rescind any Tax election, settle or compromise any Liability for Taxes, change or revoke any of its methods of Tax accounting or annual Tax accounting periods, file any amended Tax Return, surrender any claim for a refund of Taxes, enter into any closing agreement with a taxing authority relating to any Tax, or waive or extend the statute of limitations in respect of any Tax (other than pursuant to the operation extensions of separate accounts time to file Tax Returns in the ordinary course of business), consistent or (B) take any action with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material respect to the financial condition computation of the Company, any Company Subsidiary, Taxes or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case preparation of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which Tax Returns that is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance inconsistent with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportpast practice;
(jxi) The Company agrees that it shall notpay, nor shall it permit discharge or satisfy any Company Subsidiary toclaim, Liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(oA) The amend, modify or consent to the termination of any Material Contract, or amend, waive, modify or consent to the termination of the Company's or any Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect Subsidiary's rights thereunder or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep (B) enter into any contract or agreement that would not have be a Company Material Adverse EffectRestrictive Agreement or a Related Party Agreement;
(pxiii) The (A) grant any exclusive license or sub-license in respect of any Company shall deliver Owned Intellectual Property, (B) grant any license or sub-license in respect of any Company Owned Intellectual Property involving aggregate annual payments to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
of more than $50,000, (qC) The Company shall not, nor shall the Company permit transfer any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to TaxesOwned Intellectual Property, (iiD) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise develop any Intellectual Property jointly with respect to any material Tax matterthird party, or (iiiE) with respect to disclose any material Tax matter, change any of its methods of reporting income confidential Intellectual Property or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock other confidential information of the Company or any Company Subsidiary; and;
(txiv) Neither the Company nor commence or settle any Company Subsidiary shall agreeAction; or
(xv) announce an intention, in writing enter into any formal or otherwise, informal agreement or otherwise make a commitment to take do any of the actions prohibited by foregoing or take any action that would materially delay the foregoing clauses (a) through (s)consummation of the Arrangement.
Appears in 1 contract
Samples: Arrangement Agreement (L-1 Identity Solutions, Inc.)
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company its Subsidiaries that, at all times up prior to and including the Effective Time, unless Parent shall otherwise consent has consented in writing, which consent shall not be unreasonably withheld, or and except as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the business of the Company and its Subsidiaries shall be conducted only in the ordinary course of business consistent with past practices and, to the extent consistent therewith, the Company and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact, maintain existing relations and goodwill with Governmental Authorities, customers, suppliers, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of the Company and its Subsidiaries. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as otherwise expressly contemplated by this Agreement, (B) as Parent may consent in writing or (C) as set forth in Section 7.1 of the Company Disclosure Letter, the Company shall notnot directly or indirectly, and shall not permit any of its Subsidiaries to:
(a) amend the Company Articles of Incorporation or Company Bylaws or other applicable governing instruments or the organizational documents of any of its Subsidiaries;
(b) merge or consolidate with any Person or acquire (whether by acquisition of stock or assets, joint venture or otherwise) any Person or assets, in any single transaction (or series of related transactions) in excess of $100,000;
(c) (i) adjust, reclassify, split, combine, subdivide, authorize for issuance, issue or sell, pledge, dispose of or subject to any Lien any shares of any class of capital stock or other equity interest of the Company or any Subsidiary toor any options, make warrants, restricted stock, restricted stock units, convertible securities, stock appreciation rights, performance units, bonus stock, “phantom” stock rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or propose other rights of any kind to make acquire any such shares or any other equity interest, of the Company or any Subsidiary, other than issuances of shares of the Company Common Stock upon exercise or settlement of the Company Equity Awards outstanding on the date of this Agreement or (ii) repurchase, redeem or otherwise acquire any securities or equity equivalents except in the ordinary course of business in connection with (x) the cashless exercise of the Company Options in accordance with the Company Stock Plans, or (y) the settlement of the Company Equity Awards or the Company Options, in each case, in order to satisfy withholding or exercise price obligations in accordance with the Company Stock Plans;
(d) except to the extent required under any Company Benefit Plan as in effect on the date of this Agreement, (i) increase the compensation (including bonus opportunities) or fringe benefits of any of its directors, executive officers or employees (except (x) in the ordinary course of business consistent with past practice with respect to employees who are not executive officers or parties to an employment or change in its dividend practices control agreement and (y) with respect to bonus opportunities awarded following the execution of this Agreement as long as such bonus awards are not in excess of the awards made to such recipients in the prior calendar year), (ii) grant any severance or policies or in its underwritingtermination pay, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions other than nominal severance to terminated employees in the ordinary course of business consistent with past practice, but including transactions involving (iii) make any new equity (or equity-based) awards to any director, officer, employee or contractor or make any changes to existing equity (or equity-based) awards not required by any Company Benefit Plan or such awards, it being understood that to the securitization of Assets extent any such awards are to be made or changed and are disclosed in Section 7.1 of the Company Disclosure Letter, in no event shall such awards include provisions therein that would result (whether pursuant to the award agreement or plan document or other instrument that governs any such awards) in the vesting of such awards upon the consummation of the transactions contemplated in this Agreement, (iv) enter into or amend any employment, consulting, change in control or severance agreement or arrangement with any of its present, former or future directors, officers, employees or contractors, (v) establish, adopt, enter into, freeze or amend in any material respect or terminate any Company Benefit Plan or, except as otherwise provided herein, take any action to accelerate entitlement to compensation or benefits under any Company Benefit Plan or otherwise for the benefit of any Company Subsidiary and transactions involving derivative securitiespresent, former or future director, officer, employee or contractor, in each such case, except as otherwise permitted pursuant to clauses (i), whether involving a purchase (ii) or sale(iii) of this paragraph; provided that in no event may any tax gross-up or tax reimbursement feature be granted or made more favorable to any individual, that it (vi) pay, accrue or certify performance level achievements at levels in excess of actually achieved performance in respect of any component of an incentive-based award, or amend or waive any performance or vesting criteria or accelerate vesting, exercisability, distribution, settlement or funding under any Company Subsidiary is seriously considering;
(c) The Company shall not make Benefit Plan or otherwise for the benefit of any material change in accounting methods present, former or practicesfuture director, including without limitation any change with respect to establishment of reserves for unearned premiumsofficer, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, employee or any change in depreciation or amortization policies or rates adopted by itcontractor, except as required by Applicable Lawthe terms of the Company Benefit Plans as in effect on the date hereof, GAAP (vii) take any action with respect to salary, compensation, benefits or SAPother terms and conditions of employment that would result in the holder of an employment or change in control agreement having “good reason” (within the meaning of such agreement) to terminate employment and collect severance payments and benefits pursuant to such agreement, and (viii) terminate the employment of any holder of an employment or change in control agreement other than for “cause” (within the meaning of such agreement);
(de) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend declare, set aside, make or pay any dividend or other distribution or payment (whether in cash, equity interests or property or any combination thereof) with respect to any shares of any class of capital stock or other equity interests of the Company or any of its charter Subsidiaries (other than dividends or bydistributions by any Subsidiary to the Company or another wholly-laws owned Subsidiary) or (unless contemplated hereby)ii) redeem, purchase or otherwise acquire any of the Company’s or any of its Subsidiaries’ capital stock, or make any commitment for any such action other than pursuant to the Company Stock Plans as in effect on the date hereof;
(f) sell, lease, license, subject to a Lien, encumber (including by the grant of any option thereon) or otherwise surrender, relinquish or dispose of any of the assets or properties of the Company or its Subsidiaries (including capital stock of Subsidiaries) except for (i) sales of surplus or obsolete equipment, (ii) incur any individual Liability sales, leases, licenses or series other transfers between the Company and its wholly-owned Subsidiaries or between those Subsidiaries or (iii) sales, leases, licenses or other dispositions of related Liabilities assets or properties with a fair market value not in excess of $200,000 100,000;
(g) enter into any joint venture, partnership or other similar arrangement or make any loan, capital contribution or advance to or investment in any other Person (other than the Company or any wholly-owned Subsidiary of the Company);
(h) change any of the material accounting methods, policies, principles, procedures or practices except as may be required as a result of a change in GAAP;
(i) fail to maintain in full force without interruption its present insurance policies or comparable insurance coverage;
(j) make or rescind any material election relating to Taxes;
(k) settle or compromise any Proceeding, other than in the ordinary course of business consistent with past practice, or enter into any consent, decree, injunction or similar restraint or form of equitable relief in settlement of any material Proceeding or waive, release or assign any rights or claims;
(l) (i) create, incur or assume any Debt, issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any Debt or debt securities of another Person, enter into any “keep well” or other Contract to maintain any financial condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, except intercompany Debt among the Company and its Subsidiaries in the ordinary course of business consistent with past practice; (ii) repurchase, repay, defease or pre-pay any Debt, except (A) repayments in the ordinary course of business or (B) repayments of indebtedness by a Subsidiary of the Company to the Company or its wholly-owned Subsidiaries; or (iii) except with respect to any Proceeding, pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary course of business consistent with past practice;
(i) mortgage, pledge, or suffer to exist any Liens (other than Permitted Liens) on, any asset or property, or (ii) pledge or otherwise encumber any shares of capital stock of the Company or any of its Subsidiaries;
(n) except for capital expenditures for items and in the amounts set forth in the capital budget included in Section 7.1(n) of the Company Disclosure Letter, make, authorize or enter into any commitment for any capital expenditures in excess of $100,000 in the aggregate;
(o) other than in the ordinary course of business consistent with past practice, (iiii) incur modify, amend or terminate or waive any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of rights under any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)Material Contract, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided new agreement that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have been a Company Material Adverse EffectContract if it were entered into at or prior to the date hereof;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof enter into, renew, extend, amend, grant a waiver under or terminate (other than terminations in accordance with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or their terms) any Company Subsidiary after Affiliate Transaction or transaction that would be a Company Affiliate Transaction if such transaction occurred prior to the date hereof;
(q) The Company shall notadopt or implement a plan of complete or partial liquidation, nor shall dissolution, restructuring, recapitalization or other reorganization of the Company permit or any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Codeits Subsidiaries;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire acquire, directly or indirectly, any of the capital stock of the Company Parent or any Company Subsidiary; andof its Subsidiaries or securities convertible or exchangeable into or exercisable for any shares of capital stock of Parent or any of its Subsidiaries;
(s) subject to Section 7.3, take any action that would, or would reasonably be expected to, (i) result in any condition in Article VIII not being satisfied, (ii) prevent, materially delay or materially impede the consummation of the Merger or the other transactions contemplated by this Agreement or (iii) cause any representation in the applicable form of representation certificate contemplated by Section 8.2(d) hereof to be untrue as of the Closing;
(t) Neither except for actions taken pursuant to Section 7.5, take any action that would reasonably be expected to cause the Company nor any Company Subsidiary shall agree, in writing Merger to fail to qualify as a “reorganization” under Section 368(a) of the Code (whether or otherwise, not otherwise permitted by the provisions of this Article VII) or fail to take any commercially reasonable action necessary to cause the Mergers to so qualify; or
(u) agree or commit to do any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself (a) From the date of this Agreement until the earlier of the First Effective Time and the Company Subsidiaries thattermination of this Agreement in accordance with its terms (such period being hereinafter referred to as the “Interim Period”), at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or except as otherwise expressly permitted or contemplated by this Agreement or as set forth on required by Law, the Company Disclosure Schedule:
(a) The Company shall, and shall cause each other member of the Company Subsidiary Group to, conduct its business only in the ordinary course of business consistent with past practice and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all its reasonable best efforts to (i) preserve intact its present business organization and organization, (ii) preserve its regular services torelationships with its customers, lenders, employees, individual contractors and service providers, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having material business dealings relationships with it;it and (iii) pay or perform all of its material obligations when due.
(b) Except Without limiting the generality of Section 6.1(a) and except as expressly contemplated by this Agreement, as set forth on Section 6.1(b) of the Disclosure Schedule or as required by Law, during the Interim Period, without the prior written consent of Parent (not to be unreasonably withheld, delayed or conditioned), the Company shall not, and shall not permit any other member of the Company Group to:
(i) amend its Organizational Documents (whether by merger, consolidation or otherwise);
(ii) in the case of the Company, (A) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any shares of Company Capital Stock or (B) redeem, repurchase or otherwise acquire or offer to redeem, repurchase or otherwise acquire any of outstanding shares of Company Capital Stock (except for the repurchase of Company Common Stock from former employees, non-employee directors and consultants in accordance with Contracts providing for the repurchase of shares in connection with any termination of service as in effect on the date of this Agreement and disclosed on Section 6.1(b)(ii) of the Disclosure Schedule);
(iii) (A) except for the issuance of Company Common Stock as contemplated by Section 2.4(a) and Section 2.5, issue, deliver, sell, pledge, dispose of or encumber any capital stock or other equity or voting securities, securities convertible, exchangeable or exercisable into capital stock or other equity or voting securities, or warrants, options or other rights to acquire capital stock or other equity or voting securities, of the Company or any Subsidiary toof the Company, make including any awards under the Company Equity Plan, (B) amend any terms of any capital stock or propose to other equity or voting securities of the Company (whether by merger, consolidation or otherwise) or (C) split, combine, subdivide or reclassify any shares of capital stock or other equity or voting securities;
(iv) make any change capital expenditures or incur any obligations or liabilities in its dividend practices respect thereof, except for any capital expenditures not to exceed $50,000 individually or policies $100,000 in the aggregate;
(v) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets (outside the ordinary course of business consistent with past practice), securities, properties, interests or businesses that are material individually or in its underwritingthe aggregate;
(vi) sell, pricinglease or otherwise transfer, claimsor create or incur any Encumbrance (other than Permitted Encumbrances) on, risk retentionany of the assets, investmentsecurities, reinsurance practices properties, interests or policies in any material respect; and businesses of the Company agrees that it will notify Parent Group, including the Leases, other than sales and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions non-exclusive licenses of the Company Products or Services in the ordinary course of business consistent with past practice;
(vii) incur, but including transactions involving amend, assume or guarantee any Indebtedness; provided, that for the securitization avoidance of Assets doubt ordinary course trade payables shall not be considered Indebtedness;
(viii) mortgage, pledge or subject to any Encumbrance any portion of the Company Group’s properties or of any Company Subsidiary and transactions involving derivative securities)assets, whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringother than Permitted Encumbrances;
(cix) The Company make any loan, advance or capital contribution to, or investment in, any Person; provided, that for the avoidance of doubt, ordinary course trade payables shall not make be considered loans or advances;
(x) materially modify, amend, cancel or terminate (other than in accordance with its terms) any rights, or waive any material change rights, under any Material Contract or enter into any Contract that would have been a Material Contract had it been entered into prior to the date of this Agreement;
(xi) enter into a Contract in accounting methods connection with, or practicesparticipate in, or seek relief of benefits under, any program under any COVID-19 Law, including without limitation any change with in respect to establishment of reserves for unearned premiums, losses the Small Business Administration Paycheck Protection Program;
(including without limitation incurred but not reported lossesxii) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except other than as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary tothe terms of an Employee Benefit Plan in existence as of the date hereof, (iA) amend its charter increase or by-laws (unless contemplated hereby)accelerate the vesting or payment of any compensation or benefits provided or payable or to become provided or payable to any officer, director, manager, employee, individual contractor or other individual service provider of the Company Group, (iiB) incur hire, promote, terminate the employment (other than for cause) or otherwise change the employment status or title of any individual Liability or series of related Liabilities employee with annual salary in excess of $200,000 180,000, (C) enter into any new or amend any existing employment, bonus, incentive, equity, severance, retention or change in control agreement with any of its officers, directors or employees (other than salary increases in the ordinary course of business consistent with past practicefor up to three employees, which increases shall not exceed 10% of any such employee’s current aggregate salary amount), (iiiD) incur amend any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability terms of the Company Equity Plan or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Personawards issued thereunder, (viiE) enter into adopt, establish, amend or terminate any contract relating to the direct Employee Benefit Plan, or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money agreement, plan, policy, trust, fund or other financial obligation of any Person other than arrangement that would constitute an Employee Benefit Plan if it were in existence on the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)date hereof, or (xF) enter into, amend or modify any collective bargaining agreement or union contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Personunion;
(gxiii) Other than in materially modify, amend, cancel or terminate the ordinary course Contracts set forth on Section 6.1(b)(xiii) of business consistent with past practicethe Disclosure Schedule;
(xiv) sell, the Company shall notassign, and shall not permit any Company Subsidiary totransfer, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services license (other than with respect non-exclusive licenses to Investment Assets) which in one or a series customers of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts Group in the ordinary course of business), consistent with existing strategiesfail to maintain, (i) sellgrant, leasepledge, mortgageencumber, encumber dedicate to the public, cancel, allow to lapse, or abandon, including by failure to pay the required fees in any jurisdiction, or otherwise grant any interest in or dispose of any of its Assets which, individually or Intellectual Property used in the aggregate, are and material to the financial condition business of the CompanyCompany Group;
(xv) change the Company Group’s methods of accounting or accounting practices, any except as required by concurrent changes in GAAP as agreed to by the Company SubsidiaryGroup’s independent public accountants;
(xvi) commence, settle, or offer or propose to settle any material Action involving or against any member of the Company and Group or any officer or director thereof or settle any Action which involves any non-monetary relief;
(xvii) (A) cancel, compromise, waive or release any material right, debt or claim of the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 Group; or (iiB) restructuredelay or postpone the payment of payables or accelerate the payment of receivables;
(xviii) (A) make, amendchange or revoke any material Tax election inconsistent with past practice, modify (B) settle or compromise any claim, notice, audit report or assessment in respect of Taxes, (C) fail to pay Taxes that would otherwise affect be delinquent (including estimated Tax payments), (D) change any Investment Asset annual Tax accounting period or change (or make a request to any contract relating thereto which is material Governmental Authority to the financial condition change) any aspects of its method of accounting for Tax purposes, (E) consent to any extension or waiver of the Companylimitation period applicable to any Tax claim or assessment, (F) amend any income or other material Tax Return that will have a material effect on Parent or either Surviving Company Subsidiary(or their respective Affiliates) in a Post-Closing Tax Period, (G) surrender any right to claim a material Tax refund, (H) enter into any Tax sharing, closing, or the Company and the Company Subsidiaries taken as a whole, and, similar agreement in either case described in clauses (i) and (ii), only in accordance with the statement respect of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes any Taxes (other than changes in market values any agreement, arrangement or ordinary course changes such as interest paymentsother Contract not principally related to Taxes), maturitiesor (I) obtain or request any Tax ruling;
(xix) take any action for the winding up, etc.) affecting Investment Assets liquidation, dissolution or reorganization of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA appointment of a Person's Annual Statement in excess of $250,000 per transaction receiver, administrator or $250,000 per issuer administrative receiver, trustee or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf officer of the Company or any Company Subsidiary after the date hereof;of its Subsidiaries’ assets or revenues; or
(qxx) The Company shall notagree, nor shall the Company permit resolve or commit to do any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;foregoing.
(rc) Neither the Company nor any Company Subsidiary shall Parent acknowledges and agrees that: (i) make nothing contained in this Agreement shall give Parent, directly or rescind any material express indirectly, the right to control or deemed election relating direct the Company’s or Company Group’s operations prior to Taxes, the Closing and (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below)prior to the Closing, settlement or compromise with respect to any material Tax matterthe Company shall exercise, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practicethe terms and conditions of this Agreement, neither complete control and supervision over its and the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)Group’s operations.
Appears in 1 contract
Samples: Merger Agreement (Take Two Interactive Software Inc)
Conduct of Business by the Company. The Company covenants From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless Parent shall otherwise consent if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the "Termination Date"), and except (i) as may be required by law, (ii) as may be agreed in writingwriting by Parent, which consent shall not (iii) as may be unreasonably withheld, or as otherwise expressly permitted or contemplated by pursuant to this Agreement or (iv) as set forth on in Section 5.1 of the Company Disclosure ScheduleLetter, the Company:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct its business only operations in the ordinary course and of business in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itconducted;
(b) Except as contemplated by this Agreementshall use all reasonable efforts, and shall cause each of its Subsidiaries to use all reasonable efforts, to preserve intact its business organization and goodwill, keep available the services of its key employees and preserve its relationships with those persons having business dealings with the Company and its Subsidiaries;
(c) shall confer at such times as Parent may reasonably request with one or more representatives of Parent to report material matters and the general status of ongoing operations and shall provide financial and operating data to Parent to the extent reasonably requested by Parent;
(d) shall not, and shall not permit any Company Subsidiary of its Subsidiaries that is not wholly owned to, make authorize or propose to pay any dividends on or make any change in distribution with respect to its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; outstanding shares of stock (other than regular quarterly cash dividends with record dates and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business payment dates consistent with past practicepractice of not more than $.38 per Company Common Share and $4.00 per Company Series A Preferred Share) and, but including transactions involving the securitization of Assets with respect to any Subsidiary of the Company or of any Company Subsidiary and transactions involving derivative securities)that is not wholly owned by the Company, whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringexcept as contractually required on the date hereof;
(ce) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(f) shall not, and shall not permit any of its Subsidiaries to, enter into or amend any employment, severance or similar agreements or arrangements with any of their respective directors or executive officers or key employees, or adopt any new or amend any existing employee benefit plans, programs or arrangements, except as may be required by applicable law or an existing Company Plan or collective bargaining or similar agreement; provided, that the Company and any Subsidiary may engage in any of the following in the ordinary course of business with respect to key employees: hiring and terminating; conducting performance reviews; awarding merit increases in pay; and provision of severance payments and benefits; and provided, further, that the Company may implement a retention plan for key employees of the Company and its Subsidiaries, as described in the Company Letter;
(g) subject to Section 5.7(b), shall not, and shall not permit any of its Subsidiaries to, authorize, publicly announce or enter into an agreement with respect to, any merger, consolidation or business combination (other than the Merger);
(h) shall not propose or adopt any amendment to its charter or Bylaws, or similar governing documents;
(i) amend shall not, and shall not permit any of its charter Subsidiaries to, issue or by-laws authorize the issuance of, or agree to issue or sell any shares of their capital stock of any class, or any other equity interests (unless contemplated hereby)in each case, whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) other than the issuance of capital stock upon exercise of Stock Options outstanding on the date hereof and the release of shares of capital stock from restrictions pursuant to the terms in effect on the date hereof and other than any issuances, authorizations, agreements and sales (iito the Company or any other wholly owned Subsidiary of the Company) incur by a wholly owned Subsidiary of the Company in the ordinary course of business;
(j) shall not, and shall not permit any individual Liability of its Subsidiaries to, purchase or series redeem any shares of related Liabilities its capital stock, or any other equity interests or any rights, warrants or options to acquire any such shares or interests, except for any such purchases or redemptions by a wholly owned Subsidiary of the Company in excess the ordinary course of $200,000 business;
(k) shall not, and shall not permit any of its Subsidiaries to, incur, assume or prepay any material indebtedness or any other material liabilities, other than in the ordinary course of business consistent with past practice;
(l) shall not, and shall not permit any of its Subsidiaries to, (iiii) incur make any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for material loans, advances or capital contributions to, or investments in, any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combinationperson, other than by the Company or a Superior Acquisition Proposal as permitted hereinSubsidiary of the Company to or in the Company or any wholly owned Subsidiary of the Company or (ii) pay, discharge or satisfy any claims, liabilities or obligations (v) prior to notifying Parentabsolute, enter into any material partnershipaccrued, joint venture asserted or profit sharing contractunasserted, contingent or otherwise), in each case, other than contracts with insurance agents indebtedness, issuances of debt securities, guarantees, loans, advances, capital contributions, investments, payments, discharges or satisfactions incurred or committed to in the ordinary course of business consistent with past practicespractice;
(m) shall not sell, lease, license, mortgage or otherwise encumber or subject to any Lien, or otherwise dispose of, any of its material properties or material assets (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any businessincluding securitizations), to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(en) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to of its Subsidiaries to, (i) adopt or implementmake any material Tax election, except those made in the ordinary course of business that are consistent with past practice and would not have an effect with respect to periods following the Merger, or commit to adopt settle or implement, compromise any material Tax liability or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, change its fiscal year;
(iiio) increase except as described in any manner the compensation of, or enter into any contract relating Company SEC Reports filed with the SEC prior to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated required by this Agreementa governmental body or authority, enter intoshall not change its methods of accounting (including make any material write-off or reduction in the carrying value of any assets) in effect at December 31, adopt or increase any indemnification or hold harmless arrangements with any directors1997, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;than as required by changes in GAAP as agreed by the Company's independent auditors; and
(gp) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the foregoing actions prohibited by or take any action which would (x) make any representation or warranty in Article III untrue or incorrect in any material respect or (y) result in any of the foregoing clauses (a) through (s)conditions to the Merger set forth in Article VI not being satisfied.
Appears in 1 contract
Samples: Merger Agreement (Betzdearborn Inc)
Conduct of Business by the Company. The Company covenants (a) From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) as may be consented to in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise expressly permitted may be contemplated or contemplated required by this Agreement or (iv) as set forth on in Section 5.1 of the Company Disclosure Schedule:
(a) The , the Company shallcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and such entities shall cause each Company Subsidiary tonot take any action except in, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary its Subsidiaries shall use all their reasonable best efforts to (A) keep available the services of current officers, key employees and consultants of the Company and each of its Subsidiaries, (B) preserve intact its present the Company’s business organization and preserve its regular services to, intact and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales existing relations and distribution organizations, underwriters, investment goodwill with customers, brokerssuppliers, suppliers distributors, creditors and lessors, (C) maintain insurance policies or replacement or revised policies in such amounts and against such risks and losses of the Company and its Subsidiaries as are currently in effect and (D) comply in all others having business dealings material respects with it;all applicable Laws; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except as contemplated The Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and prior to the earlier of the Effective Time and the Termination Date, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the Company:
(i) shall not, and shall not permit any of its Subsidiaries that is not directly or indirectly wholly owned by this Agreementthe Company to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid or made on a pro rata basis by Subsidiaries;
(ii) except for transactions between the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, the Company shall not, and shall not permit any Company Subsidiary toof its Subsidiaries, make to redeem, repurchase, defease or propose to make otherwise cancel any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets indebtedness for borrowed money of the Company or any Subsidiary, other than (x) at stated maturity, (y) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of any Company Subsidiary and transactions involving derivative securitiescontrol put rights to which holders of such indebtedness for borrowed money may be entitled), whether involving a purchase and (z) indebtedness for borrowed money either (A) not in excess of $100,000 or sale(B) arising under the agreements disclosed in Section 5.1(b)(ii) of the Company Disclosure Schedule, that it or any Company Subsidiary is seriously consideringin each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof;
(ciii) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, (i) amend its charter make any acquisition of any other person or by-laws (unless contemplated hereby)business or make any capital expenditures, (ii) incur loans, advances or capital contributions to, or investments in, any individual Liability or series of related Liabilities other person with a value in excess of $200,000 other than 100,000 in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, aggregate;
(iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policyof its Subsidiaries to, (iiA) split, combine, reclassify, subdivide or amend the terms of any of its capital stock or issue or authorize or propose the issuance or authorization of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction or (B) enter into or materially amend any severance contract, (iii) increase in agreement with respect to voting of any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, capital stock or any securities convertible or exchangeable for such shares;
(v) pay or agree to pay any pension, retirement allowance or other employee benefit not except as required by the current terms of any existing planwritten agreements or Company Benefit Plans, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise otherwise required by operation of law or under the by-laws of a party as they exist on the date of this Agreementapplicable Law, or as contemplated by this Agreementpermitted under Section 5.6(b)(v) and Section 5.6(b)(vi), enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make (A) increase the compensation or other benefits payable or provided to the Company’s directors, executive officers or other employees, (B) enter into any capital expenditures employment, change of control, severance or expenditures or commitments for expenditures for the purchase or lease retention agreement with any employee of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken (except (1) for agreements entered into with any newly-hired employees or replacements or as a whole exceed $200,000result of promotions, except (2) for expenditures relating to this Agreement and the consummation of the transactions contemplated herebyemployment agreements terminable on less than thirty days’ notice without penalty, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h3) Other than for severance agreements entered into with employees who are not executive officers, in the ordinary course of business consistent in connection with past practiceterminations of employment) or (C) establish, adopt, enter into or amend any plan, policy, program or arrangement for the Company benefit of any current or former directors, officers or employees or any of their beneficiaries, except (x) as permitted pursuant to clause (B) above, or (y) for entering into or amending collective bargaining agreements in the ordinary course of business;
(vi) shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive any rights with a value in excess of $100,000 materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other rights which are material to items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vii) except as required by a change in Law, make, change or revoke any contract material Tax election, file any material amended Tax Return, or make settle or compromise any payment, direct material Tax liability or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its termsrefund, in each case, includingif such action could have an adverse effect that, but not limited toindividually or in the aggregate, any provision of any Insurance Contract is material to permit a cash-out thereofthe Company and its Subsidiaries;
(iviii) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, other than pursuant adopt or propose to the operation adopt any material amendments to its articles of separate accounts in the ordinary course of business, consistent with existing strategies, incorporation or by-laws or similar applicable charter documents;
(iix) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or except for transactions among the Company and the Company its wholly owned Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of among the Company’s wholly owned Subsidiaries, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, enter into issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any material contract shares of its capital stock or amend or waive any material provision of any material contract which would involve the payment by other ownership interest in the Company or any Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the terms of any unexercisable or unexercised options or warrants outstanding on the date hereof), other than (A) issuances of shares of Company Subsidiary Common Stock in respect of $200,000 any exercise of Company Stock Options or more;
the vesting or settlement of Restricted Stock Units outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b), (lB) Other than the sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes and (C) the grant of equity compensation awards in the ordinary course of business consistent in accordance with past practice, the Company’s customary long-term compensation award practices in accordance with Section 5.6(b)(vi);
(x) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, settle directly or compromise indirectly, purchase, redeem or otherwise acquire any claim in shares of the capital stock of any actionof them, proceeding or investigation which could result in an expenditure any securities convertible into or exchangeable for the Company and the Company Subsidiaries in excess of $200,000any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares, ownership interest or convertible or exchangeable securities;
(mxi) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, purchase incur, assume, guarantee, prepay or otherwise acquirebecome liable for any indebtedness for borrowed money (directly, contingently or otherwise), except pursuant to a contract in effect on for (A) any indebtedness for borrowed money among the date of this AgreementCompany and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (iB) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any controlling equity interest in any Person (other than Investment Assets)existing indebtedness for borrowed money, (iiC) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company or guarantees by the Company’s Subsidiaries of indebtedness for borrowed money of the Company or any non-publicly traded securities Subsidiary of the Company, which indebtedness is incurred in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, compliance with this Section 5.1(b) and (iiiD) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except indebtedness incurred in the ordinary course of managing business pursuant to funding facilities for the existing portfolio Company’s financial services Subsidiaries, provided that nothing contained herein shall prohibit the Company and its Subsidiaries from making guarantees or obtaining letters of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingscredit or surety bonds for the benefit of commercial counterparties in the ordinary course of business;
(nxii) The Company shall not, and shall not permit any of its Subsidiaries to, sell, pledge, lease, license, transfer, guarantee, exchange or swap, mortgage (including securitizations), or otherwise dispose of any material portion of its material properties or material assets, including the capital stock of Subsidiaries (it being understood that the foregoing shall not prohibit the sales of land or homes in the ordinary course of business), except (A) for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) pursuant to existing agreements in effect prior to the execution of this Agreement and that are set forth in Section 5.1(b)(xii) of the Company Disclosure Schedule or (C) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby;
(xiii) shall not, and shall not permit any of its Subsidiaries to, (A) adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger and consolidations, mergers or reorganizations among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries that would not result in material adverse tax consequences or material loss of tax benefits or loss of any material asset (including Intellectual Property)) or (B) vote in support of, consent to or approve a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of any joint venture or similar entity to which the Company or any of its Subsidiaries is a party that is not a Subsidiary of the Company (other than consolidations, mergers or reorganizations that would not result in material adverse tax consequences or material loss of tax benefits or loss of any material asset (including Intellectual Property));
(xiv) shall not, and shall not permit any of its Subsidiaries to, enter into any newContract that would materially restrict, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authoritiesEffective Time, unaudited or audited, as Parent and its Subsidiaries (including the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iiiSurviving Corporation and its Subsidiaries) with respect to engaging or competing in any material Tax matterline of business or in any geographic area;
(xv) shall not, change and shall not permit any of its methods Subsidiaries to, settle or compromise any litigation, or release, dismiss or otherwise dispose of reporting income any claim, liability, obligation or deductions for federal income tax purposes from those employed arbitration, other than settlements or compromises of litigation or releases, dismissals or dispositions of claims, liabilities, obligations or arbitration that involve the payment of monetary damages not in excess of $10,000 individually or $50,000 in the preparation aggregate by the Company and do not involve any material injunctive or other non-monetary relief or impose material restrictions on the business or operations of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable LawCompany;
(sxvi) Other shall not, and shall not permit any of its Subsidiaries to, enter into interest rate swaps and other similar hedging arrangements other than in the ordinary course for purposes of business offsetting a bona fide exposure (including counterparty risk);
(xvii) shall not, and consistent with past practiceshall not permit any of its Subsidiaries to, neither the Company nor issue or forgive any Company Subsidiary shall declareloans to directors, set aside or pay any dividends or distributions (whether in cashofficers, stock or property) in respect of any capital stock of the Company employees, contractors or any Company Subsidiary or redeemof their respective affiliates, purchase or otherwise acquire except for any of such issuances that would not violate the capital stock of the Company or any Company SubsidiaryXxxxxxxx-Xxxxx Act; and
(txviii) Neither the Company nor shall not, and shall not permit any Company Subsidiary shall agreeof its Subsidiaries to, in writing agree or otherwise, commit to take do any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Samples: Agreement and Plan of Merger (Medianet Group Technologies Inc)
Conduct of Business by the Company. The Company covenants From and agrees as to itself and after the Company Subsidiaries that, at all times up to and including date hereof until the earlier of (x) the Effective TimeTime or (y) the date, unless Parent shall otherwise consent in writingif any, on which consent shall not be unreasonably withheldthis Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), or except as otherwise (w) expressly permitted or contemplated under this Agreement, (x) required by this Agreement or as Law, (y) set forth on in the Company Disclosure Schedule:, or (z) agreed to in writing by Parent (except as otherwise provided herein, such agreement not to be unreasonably withheld or delayed):
(a) The the Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, (i) conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall (ii) use all its reasonable best efforts to (A) preserve intact its present business organization lines of business, (B) maintain its rights and franchises and preserve its regular services totheir relationships with contractors, customers, licensors, licensees, officers, creditors, and suppliers, and (C) maintain its relationships with, policyholders, insurers, reinsurers, agents, sales assets and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;goodwill; and
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any of its Subsidiaries to:
(i) authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities), other than dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company;
(ii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, or enter into a letter of intent or agreement in principle with respect thereto of the Company Subsidiary or any of its Subsidiaries;
(iii) except for transactions between the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, prepay, redeem, repurchase, defease, cancel or otherwise acquire any Indebtedness or guarantees thereof of the Company or any Subsidiary, other than (A) at stated maturity and (B) any required amortization payments, in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof;
(iv) make any acquisition of any other person or business or make any loans, advances or capital contributions to, or investments in, any other person, except (A) as set forth on Section 5.1(b)(iv) of the Company Disclosure Schedule or (B) as made in connection with any transaction solely between the Company and a wholly owned Subsidiary of the Company or between wholly owned Subsidiaries of the Company;
(v) authorize or make any capital expenditures, other than maintenance expenditures as required to operate in the ordinary course of business that individually or in the aggregate do not exceed $1,000,000 (net of recovery of lost-in-hole expenses from customers) in each of the second, third and fourth quarters of 2020;
(vi) split, combine or reclassify any of its capital stock or issue or authorize or propose to make the issuance of any change other securities in its dividend practices or policies respect of, in lieu of or in substitution for shares of its underwritingcapital stock, pricing, claims, risk retention, investment, reinsurance practices or policies in except for any material respect; and such transaction by a wholly owned Subsidiary of the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions which remains a wholly owned Subsidiary after consummation of such transaction;
(excluding investment transactions A) except in the ordinary course of business consistent with past practicepractice for Company Employees with an annual base salary or wage rate of less than $100,000, but including transactions involving increase the securitization compensation or other benefits payable or provided to any Company Employee, (B) grant or announce any new long-term incentives or equity or equity-based awards, or amend or modify the terms of Assets any such outstanding awards, (C) grant any transaction or retention bonuses, (D) pay annual bonuses, (E) increase the severance terms applicable to any Company Employee, (F) hire or promote any Company Employee with an annual base salary or wage rate of more than $100,000 (other than to replace any Company Employee who has resigned or been terminated from a position which the Company has determined is reasonably necessary to be filled in order to operate its business in a commercially reasonable manner, provided, that such replacement is not provided compensation or benefits which are greater than those provided to the Company Employee being replaced); or (G) establish, adopt, enter into or amend, commence participation in or terminate any Company Benefit Plan or any arrangement that would have been a Company Benefit Plan had it been entered into prior to this Agreement;
(viii) enter into any Company Labor Agreements;
(ix) waive any restrictive covenant obligations of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringEmployee;
(cx) The Company shall not enter into or make any material change in accounting methods loans or practicesadvances to any of its officers, including without limitation any change with respect to establishment of reserves for unearned premiumsdirectors, losses (including without limitation incurred but not reported losses) and loss adjustment expensesemployees, agents or consultants or make any change in depreciation its existing borrowing or amortization lending arrangements for or on behalf of any of such persons;
(xi) change financial accounting policies or rates adopted by itprocedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by Applicable GAAP, SEC rule or policy or applicable Law, GAAP or SAP;
(dxii) The Company shall not, and shall not permit adopt any Company Subsidiary to, (i) amend amendment to its charter certificate of incorporation or by-laws or similar applicable charter documents;
(unless contemplated herebyxiii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any of its Subsidiaries or any securities convertible into or exchangeable for, or the value of which is based on, any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable equity award (except as otherwise provided by the terms of this Agreement or the express terms of any equity awards outstanding on the date hereof), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than the issuance of shares of Company Common Stock in respect of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the Company Stock Plans as in effect on the date of this Agreement;
(xiv) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, directly or indirectly, purchase, redeem or otherwise acquire any shares of the capital stock of any of them or any rights, warrants or options to acquire any such shares;
(xv) incur, assume, guarantee or otherwise become liable for any Indebtedness (directly, contingently or otherwise), except (A) accounts payable in the ordinary course of business or (B) Indebtedness among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries; provided, however, that in the case of each of clauses (A)-(B) such Indebtedness does not impose or result in any additional restrictions or limitations on the Company or any of its Subsidiaries or, following the Closing, the Surviving Corporation or any of its Subsidiaries, or subject the Company or any of its Subsidiaries or, following the Closing, the Surviving Corporation or any of its Subsidiaries, to any additional covenants or obligations (other than the obligations to make payment on such Indebtedness) to which the Company or any of its Subsidiaries is not otherwise subject under the terms of any Indebtedness outstanding as of the date hereof;
(xvi) mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject to any other Lien other than Company Permitted Liens, any of the Company Assets;
(xvii) except (A) transactions wholly among the Company and its wholly owned Subsidiaries or wholly among the Company’s wholly owned Subsidiaries or (B) sales of inventory in the ordinary course of business, sell, lease, license, transfer, exchange or swap, or otherwise dispose of any of its properties or non-cash assets with a fair market value exceeding $1,000,000 in the aggregate;
(xviii) enter into or renew any Company Material Contract or any contract with a Company Top Customer or a Company Top Supplier, other than, in each case, following reasonably prompt notice to Parent, any such contract that is (x) entered into or renewed in the ordinary course of business consistent with past practicepractice and on commercially reasonable terms given then-current market conditions and (y) not otherwise prohibited by another provision of this Section 5.1;
(xix) modify or amend in any material respect, terminate or assign, or waive or assign any material rights under, any Company Material Contract or any contract with a Company Top Customer or a Company Top Supplier (iiiit being agreed and understood that any amendment or modification to the amount or terms of payment under any such contract, in a manner that is adverse to the Company and its Subsidiaries, shall be deemed “material” for purposes of this Section 5.1(b)(xix));
(xx) incur take any indebtedness for money borrowed action, that would result in the Company or any of its Subsidiaries becoming subject to any restriction not in existence on the date hereof with respect to the payment of distributions or dividends;
(xxi) (A) commence any claim, action or proceeding that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, or (B) waive, release, assign, settle or compromise any claim, action or proceeding (including any investigation), other than with respect to any non-monetary terms and conditions therein, impose or require actions that would not reasonably be expected individually or in the aggregate for to be material to the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having its Subsidiaries, taken as a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, whole;
(iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vixxii) enter into any contract limiting agreement, understanding or commitment that materially restrains, limits or impedes the Company’s or any of its Subsidiaries’, or that would reasonably be expected to, after the Effective Time, materially restrain, limit or impede the ability of the Company Parent or any of its Subsidiaries or any Company Subsidiary to engage in of their respective affiliates or any businesssuccessor’s thereto, to compete with or conduct any Personbusiness or line of business, to do business with including geographic limitations on the Company’s or any Person of its Subsidiaries’ activities;
(xxiii) (A) make any change (or file any such change) in any location method of Tax accounting; (B) make, change or to employ rescind any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person Tax election other than in the ordinary course of business consistent with past practice, business; (viiiC) settle or compromise any Tax liability or consent to any claim or assessment relating to Taxes; (D) file any amended income or other material Tax Return or claim for refund; (E) enter into any contract closing agreement relating to Taxes; or (F) waive or extend the statute of limitations in respect of Taxes;
(xxiv) write up, write down or write off the book value of any material assets, except to the extent required by GAAP applied in a manner consistent with the Company’s audited financial statements for the year ended December 31, 2019;
(xxv) fail to use commercially reasonable efforts to keep in force any insurance policy that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, currently in effect (ixor any replacement or renewal policy therefor) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract providing insurance coverage with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets Subsidiary of the Company or any the Company Subsidiary which took place since the last such reportAssets;
(jxxvi) The Company agrees that it shall not, nor shall it permit enter into any Company Subsidiary to, other than pursuant to the operation new line of separate accounts involved in real estate in the ordinary course, consistent with business outside its existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or moresegments;
(kxxvii) Other than fail to protect, maintain or otherwise keep in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit force any Company Subsidiary to, enter into any material contract Intellectual Property or amend or waive any material provision of any material contract which would involve the payment rights in Intellectual Property owned by the Company or any Company Subsidiary of $200,000 or more;the Company; or
(lxxviii) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, or resolve to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (KLX Energy Services Holdings, Inc.)
Conduct of Business by the Company. The Company covenants and agrees as During the period from the date of this Agreement to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct carry on its business only in the ordinary course consistent with past practice and comply with all applicable Laws in substantially all material respects, and, to the same manner as heretofore conducted since December 31extent consistent therewith, 1999, and the Company and each Company Subsidiary shall use all its reasonable efforts to preserve intact its present current business organization organizations, keep available the services of its current officers, employees and consultants and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings with it;
(bit with the intention that its goodwill and ongoing business shall not be materially impaired at the Effective Time. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Effective Time, except as provided in Section 5.01(a) Except of the Company Disclosure Schedule and except as expressly contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make without Parent's prior written consent, which shall not be unreasonably withheld or propose delayed (provided that in the case of any issuance, delivery or sale of shares of capital stock proposed by the Company in accordance with Section 5.01(a)(ii), Parent's consent may be withheld or delayed in its sole discretion if such issuance, delivery or sale would reasonably be likely to require an additional issuance of shares by Parent in accordance with Section 2.01(d) hereof):
(i) (A) declare, set aside or pay any dividends on, or make any change other distributions (whether in cash, stock or property) in respect of, any of its dividend practices capital stock, other than dividends or policies distributions by a direct or indirect wholly owned Subsidiary of the Company to its parent, (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 shares of its underwritingcapital stock or (C) purchase, pricingredeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, claimswarrants or options to acquire any such shares or other securities;
(ii) issue, risk retentiondeliver, investmentsell, reinsurance practices grant, pledge or policies otherwise encumber or subject to any Lien any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities, or any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock based performance units (other than (A) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options outstanding on the date hereof or granted after the date hereof in accordance with clause (B) below, in either case in accordance with their terms on the date hereof (or on the date of grant, if later), (B) the grant of options to employees hired within one year prior to, or anytime after, the date hereof to acquire shares of Company Common Stock in accordance with the Company's ordinary course of business consistent with past practice);
(iii) amend the Company Certificate or the Company By-laws or the comparable charter or organizational documents of any material respect; of its Subsidiaries;
(iv) directly or indirectly acquire (A) by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other manner, any division, business or equity interest of any person or (B) any assets forming part of such a division or business that have a purchase price in excess of $1,000,000 individually or $2,000,000 in the aggregate;
(v) sell, lease, license, mortgage, sell and leaseback or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or other assets with a fair market value in excess of $2,000,000 individually or $5,000,000 in the aggregate to a third party (except (A) by incurring Permitted Liens, (B) with respect to properties or other assets no longer used in the operation of the Company's business and/or (C) in the ordinary course of business);
(vi) make any unbudgeted capital expenditure or expenditures which (A) involves the purchase of any real property or (B) is in excess of $2,000,000 individually or $5,000,000 in the aggregate, except for any such capital expenditures provided for in the 2003 Capital Expenditure Plan (authorizing approximately $22,100,000 of capital expenditures) and the 2004 Capital Expenditure Plan (providing for approximately $22,000,000 in capital expenditures ratably over the 2004 calendar year) provided to Parent prior to the date hereof;
(vii) (A) repurchase or prepay any indebtedness for borrowed money except as required by the terms of such indebtedness, (B) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company agrees that it will notify Parent 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 or (C) make any loans, advances or capital contributions to, or investments in, any other person in excess of $250,000 in the aggregate, other than (1) any loan or advance to any physician or physicians group up to $150,000 in the aggregate, (2) any working capital advance to any Provider pursuant to COMAR Section 10.37.10.26B and provide Parent with information (3) in reasonable detail regarding the Company or in or to any material transactions direct or indirect Subsidiary of the Company;
(excluding investment transactions viii) (A) pay, discharge, settle or satisfy any claims (including claims of stockholders), liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise) (1) in excess of $2,000,000 individually and $5,000,000 in the aggregate, other than in the ordinary course of business consistent with past practice, but including transactions practice or (2) involving any material limitation on the securitization conduct of Assets the business of the Company or its Subsidiaries or (B) waive or release any right of any the Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change of its Subsidiaries with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities a value in excess of $200,000 250,000;
(ix) enter into, modify, amend or terminate (A) any Contract which if so entered into, modified, amended or terminated would reasonably be expected to (1) have a Company Material Adverse Effect, (2) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (3) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement, (B) any other Contract that involves the Company or any of its Subsidiaries incurring a liability in excess of $2,000,000 individually or $5,000,000 in the aggregate and that is not terminable by the Company without penalty with one year or less notice (excluding contracts or amendments entered into or made in the ordinary course of business with customers or Providers of the Company or its Subsidiaries), (C) any Contract by which the Company or any of its Subsidiaries grants any license to intellectual property (other than trade or service marks) or (D) any Contract that contains a covenant restricting the ability of the Company or any of its Subsidiaries (or which, following the consummation of the Merger, would restrict the ability of Parent or any of its Subsidiaries, including the Surviving Entity and its Subsidiaries) to compete in any business or with any person or in any geographic area;
(x) enter into any Contract which if in effect as of the date hereof would be required to be disclosed pursuant to Section 3.10(b) hereof (other than Contracts required to be disclosed pursuant to Section 3.10(b)(v)) to the extent consummation of the transactions contemplated by this Agreement or compliance by the Company with the provisions of this Agreement would reasonably be expected to conflict with, or result in a violation or breach of, or default (with or without notice or lapse of time or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to a loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of the Company or any of its Subsidiaries under, or give rise to any increased, additional, accelerated or guaranteed right or entitlement of any third party under, or result in any material alteration of, any provision of such Contract;
(xi) except as required to comply with applicable Law or any Contract, or pursuant to the terms of any Company Plan existing on the date of this Agreement (including any bonus payments for the Company's 2003 fiscal year under the bonus plans set forth in Section 6.11 of the Company Disclosure Schedule), (A) increase in any manner the compensation or fringe benefits of, or pay any bonus to, any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries other than increases and bonuses consistent with past practice, (B) pay to any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries any benefit not provided for under any Contract or Company Plan other than the payment of cash compensation in the ordinary course of business consistent with past practice, (iiiC) incur grant any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of awards under any Company Subsidiary to engage 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 businessContract or Company Plan or awards made thereunder), to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practiceto employees hired within one year prior to, or anytime after, the date hereof, (viiiD) enter into take any contract that is reasonably likely action to materially and adversely affect fund or in any other way secure the consummation payment of the transactions contemplated herebycompensation or benefits under any Contract or Company Plan, (ixE) violate take any action to accelerate the vesting or payment of its covenants any compensation or benefit under the Pooling Agreement any Contract or Company Plan, (as defined below), F) materially change any actuarial or (x) modify any contract other assumption used to calculate funding obligations with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue Plan or sell any shares of or interests in, or rights of any kind change the manner in which contributions to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in Plan are made or the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, basis on which such contributions are determined or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (iG) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other new employee benefit contract, plan or policy, (ii) enter into arrangement or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect terminate any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any existing Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, andPlan, in either each case described in clauses (i) and (ii)for the benefit of any current or former director, only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly reportofficer, in detail reasonably acceptable to Parent, of all such transactions employee or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets consultant of the Company or any Company Subsidiary which took place since the last such reportof its Subsidiaries, other than required by applicable Law or tax qualification requirement;
(jxii) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring adopt or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material collective bargaining agreement or other labor union contract or amend or waive any material provision of any material contract which would involve applicable to the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf employees of the Company or any Company Subsidiary after the date hereofof its Subsidiaries;
(qxiii) The Company shall not, nor shall fail to use reasonable efforts to maintain existing insurance policies or comparable replacement policies to the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as extent available for a reorganization under Section 368 of the Codereasonable cost;
(rxiv) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxeschange its fiscal year, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change revalue any of its methods of reporting income material assets, or deductions for federal income make any changes in financial, actuarial, statutory or tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31accounting methods, 1999principles or practices, except in each case as may be required by Applicable GAAP or applicable Law;
(sxv) Other than in the ordinary course make any material tax election or settle or compromise any material tax liability, or agree to an extension of business and consistent a statute of limitations with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiaryto material taxes; andor
(txvi) Neither the Company nor authorize any Company Subsidiary shall agreeof, in writing or otherwisecommit, propose or agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (Mid Atlantic Medical Services Inc)
Conduct of Business by the Company. The Company covenants and agrees as to itself that during the period commencing on the date of this Agreement and the Company Subsidiaries that, ending at all times up to and including the Effective TimeTime or such earlier date as this Agreement is validly terminated pursuant to Section 7.1 (the “Pre-Closing Period”), unless in the case of each of Sections 4.1(a) and 4.1(b) below, (1) Parent shall otherwise consent in writing, writing (which consent shall not be unreasonably withheld, conditioned or as otherwise delayed) or (2) such action is expressly permitted or contemplated by required pursuant to this Agreement or as set forth on (including Section 4.1 of the Company Disclosure ScheduleLetter) or is required by applicable Law:
(a) The Company shall, and shall cause each of the Company Subsidiary Subsidiaries to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all their respective commercially reasonable efforts to (i) conduct their business in the Ordinary Course of Business and (ii) in the Ordinary Course of Business, (A) preserve intact intact, in all material respects, its present business organization and operations, (B) keep available the services of its directors, officers and key employees and (C) preserve its regular services to, and maintain its current material relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers distributors, licensors, licensees and all others having with which it has significant business dealings with it;dealings; provided, however, that no action relating to the subject matter of any of clauses (i) through (xxii) of Section 4.1(b) below taken that is permitted to be taken by the Company or any Company Subsidiary under such clause of Section 4.1(b) without Parent’s consent shall be deemed a breach of this Section 4.1(a).
(b) Except as contemplated by Without limiting the generality of the foregoing Section 4.1(a), but subject to the limitations and qualifications set forth in the introduction to this AgreementSection 4.1, the Company shall not, and shall not permit any of the Company Subsidiary Subsidiaries to, make do any of the following:
(i) amend the Company Charter Documents or the Subsidiary Constituent Documents;
(ii) except for Shares issuable upon the exercise, vesting, settlement or conversion of Company Equity Awards (other than the awards described in Section 2.2(a)(v)(B)), issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, publicly 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 or any other agreements 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;
(iii) 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 (other than dividends paid by a wholly-owned Subsidiary to the Company or another wholly-owned Subsidiary of the Company), or make any change other actual, constructive or deemed distribution in respect of the shares of capital stock;
(iv) split, combine, subdivide or reclassify its dividend practices outstanding securities;
(v) purchase or policies otherwise acquire, sell, lease, transfer or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices dispose of or policies encumber in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding respect any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets assets of the Company or the Company Subsidiaries that are material to the conduct of the business of the Company and the Company Subsidiaries, taken as a whole, other than (A) purchases of inventory and other assets in the Ordinary Course of Business or pursuant to existing Contracts, (B) pursuant to dispositions of obsolete, surplus or worn out assets (including Company Intellectual Property) that are no longer useful in the conduct of the business of the Company and the Company Subsidiaries, (C) capital expenditures contemplated by the Company’s 2018 budget provided to Parent prior to the date hereof, (D) for transactions between the Company and any wholly-owned Subsidiary of the Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it between wholly-owned Subsidiaries of the Company or any Company Subsidiary is seriously considering(E) Liens created in the Ordinary Course of Business in connection with borrowings under existing credit facilities;
(cvi) The Company shall not make any material change acquire (by merging or consolidating with or by purchasing all or a substantial equity interest in accounting methods or practices, including without limitation any change with respect to establishment a substantial portion of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesthe assets of, or by any change in depreciation other manner) any business, corporation, partnership, association or amortization policies other business organization or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities division thereof in excess of $200,000 5,000,000 in the aggregate;
(vii) purchase, redeem or otherwise acquire, or authorize or agree to purchase, redeem or acquire, directly or indirectly, 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 from holders of Company Equity Awards in full or partial payment of the ordinary course exercise price (as applicable) and any applicable Taxes payable by such holder upon exercise, vesting or settlement of business consistent with past practiceCompany Equity Awards, in each case, to the extent required or permitted under the terms of such Company Equity Awards;
(iiiviii) incur any indebtedness for money borrowed in the aggregate for money, issue any debt securities or warrants or other rights to acquire debt securities or enter into any capital leases (other than (A) loans, capital contributions, advances or investments between the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability wholly-owned Subsidiary of the Company or between wholly-owned Subsidiaries of the Company, (B) borrowings under existing credit facilities incurred in the Ordinary Course of Business, (C) indebtedness incurred in connection with equipment financings in the Ordinary Course of Business and (D) trade payables incurred in the Ordinary Course of Business) or assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any Company Subsidiary other Person (other than with respect to engage in obligations of any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee wholly-owned Subsidiary of any obligation the Company and letters of any Person in respect credit or similar arrangements issued to or for the benefit of indebtedness for borrowed money or other financial obligation of any Person other than suppliers and manufacturers in the ordinary course Ordinary Course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, Business);
(ix) violate make any of its covenants under the Pooling Agreement (as defined below)loans, advances or capital contributions to, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests investments in, or rights any other Person except (a) for travel advances in the Ordinary Course of any kind Business to acquire any shares employees of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary, (b) extensions of trade credit in the Ordinary Course of Business or (c) among direct or indirect wholly-owned Subsidiaries of the Company in the Ordinary Course of Business;
(f) Except (x) other than in connection with the incurrence of any indebtedness permitted pursuant to clause (viii) above, mortgage or pledge any of the Company’s or its Subsidiaries’ assets, tangible or intangible, or create or suffer to exist any Lien thereupon (other than Permitted Liens);
(xi) except as required by Law or any Company Employee Plan set forth in Section 2.9(a) of the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the Letter under terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreementhereof, (A) grant any new rights to, or as contemplated by this Agreementincrease, enter intoany severance or termination pay to any current or former director, adopt officer, employee or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents consultant (who is a natural person) of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary Subsidiary, (B) increase the compensation, bonus or other benefits of any current or former director, officer, employee or consultant (who is a party;
(hnatural person) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since (except for routine annual base salary increases in the last such report;
Ordinary Course of Business for employees with base compensation of less than $250,000), (jC) The Company agrees that it shall notpay any bonus, nor shall it permit grant any new awards, or modify any existing awards (including to accelerate the vesting or payment thereof), under any Company Subsidiary to, other than pursuant to the operation Employee Plan or any arrangement that would have been a Company Employee Plan had it been in effect as of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgmenthereof, (D) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract employment, consulting, severance, termination or amend similar agreement with any current or waive any material provision of any material contract which would involve the payment by the Company former director, officer or any Company Subsidiary of $200,000 employee or more;
consultant (lwho is a natural person) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after (except in connection with “at will” offer letters for new hires (including consultants) with base compensation of less than $250,000 that are terminable on less than ninety (90) days’ notice without penalty), (E) adopt or establish any collective bargaining agreement or new Company Employee Plan (or employee benefit plan or arrangement that would have been a Company Employee Plan if in effect on the date hereof;
) or amend in any respect any existing Company Employee Plan (q) The Company shall not, nor shall except for any such amendment that does not increase the cost of such plan to the Company permit by more than a de minimis amount and except as may otherwise be permitted by this clause (ix)), (F) hire, promote or terminate without “cause” the employment of any executive officer, or any employee whose base compensation exceeds $250,000, (G) take any action to fund or in any other way secure the payment, of compensation or benefits under any Company Subsidiary toEmployee Plan, take (H) change any actions that would be reasonably likely actuarial or other assumptions used to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor calculate funding obligations for any Company Subsidiary shall (i) make Employee Plan or rescind any material express change the manner in which contributions to such plans are made or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999basis on which such contributions are determined, except as may be required by Applicable Law;
GAAP or (sI) Other forgive any loans, or issue any loans (other than routine travel or business expense advances issued in the ordinary course Ordinary Course of business and consistent with past practiceBusiness), neither the Company nor to any Company Subsidiary shall declarecurrent or former director, set aside officer or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock employee of the Company or any Company Subsidiary; and
(t) Neither provided, however, that the Company nor or any Company Subsidiary shall agreemay establish a bonus program in respect of fiscal year 2018 in the Ordinary Course of Business with respect to bonus targets, performance measures and goals;
(xii) (A) make, change or rescind any material Tax election, (B) settle or compromise any material Tax liability, or surrender any right to a material refund or reduction in respect of Taxes, (C) amend any material Tax return, (D) adopt or change any method of Tax accounting or reporting in respect of material Taxes, or (E) consent to any extension or waiver of any limitation period with respect to any material claim or assessment for Taxes;
(xiii) make any material change to its accounting policies or practices, except as required by GAAP or applicable Law;
(xiv) other than in the Ordinary Course of Business, revalue in any material respect any of its properties or assets, including writing-off notes or accounts receivable, in writing any case other than as required by GAAP or otherwiseapplicable Law;
(xv) enter into a material line of business outside of the business of the Company and its Subsidiaries conducted as of the date hereof;
(xvi) (i) cancel any material indebtedness owed to the Company or its Subsidiaries; or (ii) waive, release, grant or transfer any material claim or right of material value or consent to the termination of any material claim or right of material value;
(xvii) settle or compromise any litigation or other legal proceedings, other than any settlement or compromise where the amount paid or to be paid by the Company or any Company Subsidiary (A) is covered by insurance coverage maintained by the Company or a Company Subsidiary, (B) is less than or equal to the amount reserved therefor or reflected on the balance sheet included in the Company Financial Statements, (C) is less than or equal to $750,000 individually or $3,000,000 in the aggregate or (D) is comprised of any combination of the foregoing;
(xviii) except in the Ordinary Course of Business, amend, modify or terminate (which, for the avoidance of doubt, shall not include any expiration of a Company Material Contract in accordance with its then-existing term) any Company Material Contract, or knowingly waive, release or assign any material rights, claims or benefits under any Company Material Contract, or enter into any new Contract that, if entered into prior to the date of this Agreement, would constitute a Company Material Contract, excluding any non-exclusive license agreements or the exercise of any renewal or expansion rights contained in any Company Material Contract;
(xix) sell, license, sublicense, covenant not to sxx under, abandon, assign, transfer, disclose, create any Lien on (other than Permitted Liens), or otherwise grant any rights under any Company Intellectual Property that is material to the Company and the Company Subsidiaries, taken as a whole, or amend, renew, terminate, sublicense, assign or otherwise modify any license or other agreement by the Company or any Company Subsidiary with respect to any licensed Company Intellectual Property that is material to the Company and the Company Subsidiaries, taken as a whole, in each case other than in the Ordinary Course of Business;
(xx) fail to use commercially reasonable efforts to maintain existing insurance policies or comparable replacement policies, in each case to the extent available for a reasonable cost;
(xxi) except in the Ordinary Course of Business, enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee), or materially modify or amend or waive or violate any material term or condition of any lease or sublease of real property;
(xxii) sell or acquire any real property;
(xxiii) enter into or consummate any Related Party Transaction; or
(xxiv) agree or commit to take any of the actions prohibited precluded by the foregoing clauses (a) through (sSection 4.1(b).
(c) Notwithstanding the foregoing, nothing contained herein shall give Parent or Merger Sub, directly or indirectly, rights to control or direct the operations of the Company prior to the Closing. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its and its Subsidiaries’ respective operations.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself From the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to Article IX, and except (i) as expressly contemplated or permitted by this Agreement, (ii) as may be required by applicable Law, (iii) as set forth in the correspondingly numbered section of the disclosure letter delivered by the Company Subsidiaries thatto Parent at or prior to the execution hereof (the “Company Disclosure Schedule”), at all times up to and including or (iv) with the Effective Time, unless prior written consent of Parent shall otherwise consent in writing, (which consent shall will not be unreasonably withheld, delayed or as otherwise expressly permitted or contemplated by this Agreement or as set forth on conditioned), the Company Disclosure Schedulewill not, and will cause each of its respective Subsidiaries not to:
(a) The Company shall, and shall cause each Company Subsidiary to, (i) conduct its business only and the business of its Subsidiaries in all material respects other than in the ordinary course and in substantially the same manner as heretofore conducted since December 31course, 1999, and the Company and each Company Subsidiary shall (ii) fail to use all commercially reasonable efforts to preserve intact its present business organization organizations, goodwill and preserve its regular services to, assets and maintain its relationships withrights, policyholders, insurers, reinsurers, agents, sales franchises and distribution organizations, underwriters, investment existing relations with customers, brokerssuppliers, suppliers employees and all others having business dealings with itassociates, or (iii) take any action that adversely affects the ability of either Party to obtain any approvals required under the HSR Act for the transactions contemplated hereby;
(b) Except (i) create, issue, sell or otherwise permit to become outstanding, deliver, pledge, dispose of, grant, transfer, encumber or authorize the creation, issuance, sale, delivery, pledge, disposition, grant, transfer or encumbrance of, any additional equity or any additional Rights, other than issuances of Company Common Shares upon the exercise or settlement of Company Options outstanding as contemplated of the date of this Agreement in accordance with their terms or issued after the date hereof in accordance with the terms hereof, (ii) amend any term of the Company Common Shares or any Rights (whether by this Agreementmerger, consolidation or otherwise), or (iii) enter into any agreement, understanding or commitment with respect to the foregoing;
(c) (i) subdivide, recapitalize, adjust, split, combine, exchange or reclassify or enter into any similar transaction with respect to equity interests in the Company or any of its Subsidiaries or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for equity interests in the Company or any of its Subsidiaries, or (ii) repurchase, redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries to purchase, redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire any capital stock, membership, partnership or other equity interests or Rights in the Company or any of its Subsidiaries, except upon the forfeiture of Company Options and Company Restricted Shares in connection with the terms thereof or to satisfy any applicable exercise price or Tax withholding obligations of the holder of such interests of Rights;
(d) (i) sell, lease, dispose of or discontinue, assign, license, mortgage or otherwise transfer, or create or incur any Lien (other than Permitted Encumbrances) upon, or pledge, surrender, encumber, divest, cancel, abandon, release or allow to lapse or expire or otherwise dispose of any of the Oil and Gas Properties or assets (including any intangible assets), licenses, operations, rights, securities, properties, interests or businesses of the Company or any of its Subsidiaries, other than sales, leases, assignments or transfers of Oil and Gas Properties or other assets, properties or businesses of the Company or any of its Subsidiaries with a value of less than $10,000,000 in the aggregate; provided, that the Company shall not, and shall not permit any Company Subsidiary to, make or propose commercially reasonable efforts to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent at least ten (10) days prior to entering into any such transaction and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions 3) sales of Hydrocarbons and equipment in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, or lease any individual Liability assets (including any intangible assets), securities, properties, interests or series of related Liabilities in excess of $200,000 businesses other than the acquisition or lease of Oil and Gas Properties or other assets in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days merge, consolidate or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete combination transaction with any Person, (iv) convert from a corporation, limited partnership or limited liability company, as the case may be, to do any other business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)entity, or (xv) modify become a non-consenting party in any contract operation proposed with respect to the subject of any of the foregoing clausesOil and Gas Properties;
(e) The (i) make, declare, set aside or pay dividends or other distributions (whether in cash, stock or property or any combination thereof) in respect of Company shall not, nor shall it permit any Company Subsidiary to, issue Common Shares or sell any shares of or interests in, or rights the equity securities of any kind of the Company’s Subsidiaries, other than (A) pro rata dividends and pro rata distributions paid by any Subsidiary of the Company to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any its Subsidiaries and (B) purchases, redemptions or other acquisitions of Company Subsidiary;
(f) Except (x) Common Shares, Company Options or Company Restricted Shares, as set forth in the Company Disclosure Scheduleapplicable, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans Stock Plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement; or (ii) enter into any agreement, undertaking or commitment with respect to the voting of its equity or voting securities or Rights;
(f) amend or adopt or propose any amendment to the Company Charter or Company Bylaws or any organizational document of the Company’s Subsidiaries as in effect on the date of this Agreement (whether by merger, consolidation, acquisition of stock or assets or otherwise);
(g) enter into any contract, agreement or arrangement that (i) any controlling equity interest in any Person (other than Investment Assets), would be a Company Material Agreement had it been entered into prior to the date of this Agreement or (ii) any non-publicly traded securities in excess would prevent or materially delay the consummation of $1,000,000 per transaction the Merger or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingsother transactions contemplated by this Agreement;
(nh) The Company shall notmodify, and shall not permit any Company Subsidiary toamend, enter into any newterminate, default under or assign, or materially amend waive, assign or terminate release any existingrights, reinsurance contracts claims or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf benefits of the Company or its Subsidiaries under, any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind Material Agreement in any material express or deemed election relating to Taxes, respect in each case (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other other than in the ordinary course case of business and consistent a default), except for renewals or term expirations in accordance with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect terms of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).any
Appears in 1 contract
Samples: Merger Agreement (Noble Energy Inc)
Conduct of Business by the Company. Pending the Closing. The Company covenants and agrees as to itself and the Company Subsidiaries that, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, except for actions unanimously approved by the Company's Board of Directors at all times up to a duly called and including held meeting or unless the Effective Time, unless Parent shall Purchasers otherwise consent agree in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of the Subsidiaries to, (i) conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall consistent with past practice; (ii) use all reasonable best efforts to preserve intact its present business organization and preserve its regular services to, and maintain its assets and properties and its relationships withwith its customers, policyholderssuppliers, insurersadvertisers, reinsurersdistributors, agents, sales officers and distribution organizations, underwriters, investment customers, brokers, suppliers employees and other Persons with which it has significant business relationships; (iii) use reasonable best efforts to maintain all others having business dealings with it;
(b) Except as contemplated by this Agreement, of the Company shall not, and shall not permit any Company Subsidiary to, make material assets it owns or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions uses in the ordinary course of business consistent with past practice, but including transactions involving ; (iv) use reasonable best efforts to preserve the securitization goodwill and ongoing operations of Assets of the Company or of any Company Subsidiary its business; (v) maintain its books and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than records in the usual, regular and ordinary course of business manner, on a basis consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company ; and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company comply in all material respects with applicable Laws. Except as expressly contemplated by this Agreement or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in on Schedule 4.1, between the Company Disclosure Schedule, (y) in date of this Agreement and the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable LawClosing, the Company shall not, and shall cause each of the Subsidiaries not permit to, do any Company Subsidiary to of the following without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld or delayed:
(a) (i) adopt or implement, or commit to adopt or implement, or materially amend, issue any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policydebt securities, (ii) enter into or materially amend incur any severance contractadditional indebtedness (other than indebtedness pursuant to the Company's Senior Secured Credit Facilities), (iii) increase in any manner the compensation ofassume, grant, guarantee or endorse, or enter into make any contract relating to other accommodation or arrangement making the borrowing of money byCompany or any Subsidiary responsible for, its directors, officers any liabilities or other employees, except pursuant to the terms obligations of agreements any other Person or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employeesmake any loans, (v) pay advances or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognizecapital contributions to, or involuntarily become subject toinvestments in, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(gb) Other than in the ordinary course change any method of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures accounting or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment accounting practice used by the Company or any Company Subsidiary of $200,000 or moreSubsidiary, other than such changes required by GAAP;
(lc) Other than in the ordinary course of business consistent with past practicerepurchase, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
redeem (m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect Section 4.5 of the Company's Certificate of Incorporation) or otherwise acquire or exchange any share of Common Stock or other equity interests; except for issuances of Class A Common Stock pursuant to the exercise of options to purchase Class A Common Stock outstanding on the date hereof and other issuances of this AgreementClass A Common Stock, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (each case as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown listed on Schedule BA 2.3, issue or sell any additional shares of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditthe capital stock of, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investmentsother equity interests in, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall notSubsidiary, nor shall the Company permit or securities convertible into or exchangeable for such shares or other equity interests, or issue or grant any Company Subsidiary tosubscription rights, take options, warrants or other rights of any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election character relating to Taxesshares of such capital stock, (ii) make a request for a tax ruling such other equity interests or enter into a Tax Ruling (as defined below), settlement such securities; or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside aside, make or pay any dividends dividend, or distributions (whether in cashmake any distribution, stock or property) in respect of any shares of capital stock of the Company other than as required with respect to the Series A Preferred Stock;
(d) amend the Company's or any Company Subsidiary Subsidiary's charter or redeem, purchase by-laws or otherwise acquire other organizational documents except with respect to the filing of the Certificates of Designation;
(e) take any action that is reasonably likely to result in (i) any of the capital stock representations and warranties set forth in Article II becoming false or inaccurate in any material respect as of the Company Closing Date or (ii) any Company Subsidiaryof the conditions to the obligations of the Purchasers set forth in Section 5.2 not being satisfied; andor
(tf) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the actions prohibited restricted by the foregoing clauses (a) through (s)this Section 4.1.
Appears in 1 contract
Samples: Exchange Agreement (Forstmann Little & Co Sub Debt & Eq MGMT Buyout Par Vii Lp)
Conduct of Business by the Company. The Company covenants From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) with the prior consent of the Parent shall otherwise consent in writing, (which consent shall may not be unreasonably withheld, delayed or as otherwise expressly permitted or contemplated by this Agreement or conditioned), (ii) as set forth on in Schedule 5.1 of the Company Disclosure Schedule, (iii) as may be required by Law or (iv) as expressly contemplated by this Agreement:
(a) The Company shall, covenants and shall cause each Company Subsidiary to, conduct its agrees with Parent that the business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and of the Company and each Company Subsidiary its Subsidiaries shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services tobe conducted, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and such entities shall not permit take any Company Subsidiary toaction, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions except in the ordinary course of business consistent with past practicepractices.
(b) The Company agrees, but including transactions involving the securitization on behalf of Assets of the Company or of any Company Subsidiary itself and transactions involving derivative securities), whether involving a purchase or saleits Subsidiaries, that it between the time of execution hereof and the Effective Time, the Company:
(i) shall not amend its charter or any Company Subsidiary is seriously consideringbylaws;
(cii) The Company shall not make any material change in accounting methods or practicesother than dividends and distributions by a wholly owned Subsidiary to its parent, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any of its Subsidiaries to authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock in cash, assets, stock or other securities of the Company Subsidiary or its Subsidiaries;
(iii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock;
(iiv) shall not, and shall not permit any of its Subsidiaries to (A) hire any new employees, consultants or independent contractors, except to replace any employee that terminates his or her employment between the date of this Agreement and the Effective Time, (B) terminate any employees (other than for cause provided that any such termination for cause shall be contemporaneously communicated to Parent), (C) other than the payment of regular base salaries or directors fees, at the rates in effect as of the date hereof, make any compensation payments or awards, including the grant of any equity or cash awards, to any director or officer or employee of the Company or any of its Subsidiaries, (D) grant or increase the compensation, severance or other benefits payable or to become payable to its current or former directors, officers or employees, (E) adopt, enter into, establish, amend, modify or terminate any Company Benefit Plan or any employment, consulting, collective bargaining, bonus or other incentive compensation, health or other welfare, pension, retirement, severance, deferred compensation or other compensation or benefit plan with, for or in respect of any shareholder, director, officer, other employee or consultant that would constitute a Company Benefit Plan had it been in effect as of the date of this Agreement, (F) amend the terms of any outstanding equity-based awards, (G) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, to the extent not already provided in any such Company Benefit Plan, (H) change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or (I) forgive any loans to current or former directors, officers or employees of the Company or any of its charter Subsidiaries;
(v) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its officers, directors, employees, affiliates, agents or consultants (other than business expense advances in the ordinary course of business consistent with past practices) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons;
(vi) shall not, and shall not permit any of its Subsidiaries to, make any change with respect to material accounting policies or procedures, except as required by GAAP, SEC rule or policy or applicable Law;
(vii) shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws laws;
(unless viii) shall not and shall not permit any of its Subsidiaries to, take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise required by the express terms of any unexercisable options outstanding on the date hereof or as contemplated herebyby Section 2.3(e) of this Agreement) or (A) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities; or (B) grant, confer or award any options, warrants, convertible security or other rights to acquire any shares of its capital stock;
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, or otherwise become liable for any Indebtedness (directly, contingently or otherwise) except for (A) accrual of interest under the Company’s existing Indebtedness, or (B) Indebtedness which is made available under the Note Purchase Agreements to the extent permissible thereunder;
(x) shall not, and shall not permit any of its Subsidiaries to (other than business advances in the ordinary course of business) make any loans, advances or capital contributions to, or investments in, any other Person, other than by the Company or a Subsidiary of the Company to, or in the Company or any of its Subsidiaries;
(xi) shall not sell, lease, license, transfer, abandon, let lapse, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien or otherwise dispose of any of its properties or assets, including the capital stock of any of its Subsidiaries except pursuant to agreements contemplating the transfer of the Additional Spectrum Assets or Other Assets on terms reasonably acceptable to Parent, taking into account the terms of the Note Purchase Agreements;
(iixii) incur shall not, and shall not permit any individual Liability of its Subsidiaries to, modify, amend, terminate or series of related Liabilities waive any rights under any Company Contract or any Additional Contract in excess of $200,000 any material respect in the aggregate, other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnershipAdditional Contract, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(exiii) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, make or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or capital expenditures other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice;
(xiv) except as required by Law, or as may be required by GAAP, shall not (A) make or change any material Tax election, (B) materially amend any material Tax Return, (C) take any material position on any material Tax Return filed on or after the Company date of this Agreement, or adopt any material accounting method therefor that is inconsistent with elections made, positions taken or accounting methods used in preparing or filing similar Tax Returns in prior periods or (D) settle or resolve any material Tax controversy;
(xv) shall not (A) enter into any new line of business or (B) except as currently conducted, engage in the conduct of any business in any state which would require the receipt or transfer of a Permit or License authorizing operation or provision of any communication services or foreign country that would require the receipt or transfer of, or application for, a Permit or License;
(xvi) shall not file for any Permit or License (A) outside of the ordinary course of business or (B) the receipt of which would reasonably be likely to prevent, impair or delay the consummation of the transactions contemplated hereby or by the terms of the Note Purchase Agreements;
(xvii) shall not settle any Action before, or threatened to be brought before, a Governmental Entity which provides for anything other than the payment of money;
(xviii) shall not assign, transfer, cancel, fail to renew or fail to extend any Transferred Spectrum Assets; and
(xix) shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make any capital expenditures agree or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than contract, in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf contravention of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shallFrom and after the date hereof and prior to the Closing Date or the date, if any, on which this Agreement is earlier terminated pursuant to Section 8.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) with the prior written consent of the Buyer, or (iii) as expressly contemplated or permitted by this Agreement, the Company shall cause each Company Subsidiary to, (A) conduct its business only Business in all material respects in the ordinary course and in substantially consistent with past practices (after taking into consideration the same manner as heretofore conducted since December 31current financial condition of the Company), 1999, and the Company and each Company Subsidiary shall (B) use all commercially reasonable efforts to maintain and preserve intact its present Business, the Acquired Assets and its advantageous business organization relationships and preserve (C) use commercially reasonable efforts to obtain any necessary approvals (including the Regulatory Approvals) of any regulatory agency or other Governmental Entity required for the transactions contemplated hereby, performing its regular services tocovenants and agreements under this Agreement or consummating the transactions contemplated hereby or otherwise materially delay or prohibit consummation of the Transaction or other transactions contemplated hereby; provided, and maintain its relationships withhowever, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings that no action by the Company with it;respect to matters specifically addressed by any other provision of this Section 6.1 shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except The Company agrees with the Buyer that between the date hereof and the Closing Date, except as expressly contemplated or expressly permitted by this Agreement, the Company shall not, without the prior written consent of the Buyer:
(i) grant any person any right to acquire any shares of its capital stock;
(ii) issue any additional shares of capital stock except pursuant to the exercise of stock options or other awards issued under the Company Stock Plans or pursuant to any other convertible securities issued and outstanding as of the date hereof and in accordance with the terms of such instruments;
(iii) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any of the Acquired Assets;
(iv) make any capital expenditure;
(v) incur, assume, guarantee, or become obligated with respect to any debt;
(vi) make any investment in excess of $10,000 in the aggregate;
(vii) (i) create or acquire any Subsidiary, (ii) purchase or otherwise acquire any shares of capital stock or other equity interest of any other corporation or limited liability company or any interest in any partnership, joint venture or other non-corporate business enterprise or (ii) make any equity or debt investment in any Person;
(viii) (A) amend, in any manner adverse to the Company, the loan agreement between the Company and Emigrant, dated April 7, 2009, and any other agreements, notes, security agreements and other instruments executed and delivered in connection with such loan agreement; provided, however, that the Company shall be permitted (without the consent of the Buyer) to enter into any additional forbearance agreements with Emigrant to extend the forbearance period under the Forbearance Agreement; provided, however, that any such additional forbearance agreements shall not permit any obligate the Company Subsidiary toto incur additional costs (whether monetary or otherwise) in connection thereunder other than such additional costs resulting from the increase in the interest rate payable on the loan from Emigrant to be the lesser of (x) 18% per annum and (y) the maximum rate permitted by law, make or propose as contemplated by the Forbearance Agreement (for avoidance of doubt, the Company shall not be permitted to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies amend the loan agreement in any material respect; other manner except as contemplated in the immediately preceding sentence), and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions B) except in the ordinary course of business consistent with past practice, but including transactions enter into, renew, extend, materially amend or terminate (x) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract (other than terminating the Lease Agreement effective on or after the Closing), or (y) any Contracts not in the ordinary course, involving the securitization commitment or transfer of Assets value in excess of $10,000 in the aggregate; provided, however, that notwithstanding any of the foregoing, the Company shall be permitted (after receipt of the Buyer’s consent, which consent shall not be unreasonably withheld, delayed or conditioned) to terminate or reduce the salary of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringemployee of the Company;
(cix) The Company shall waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not make in excess of $10,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any claims, liabilities or obligations in excess of such amount, in each case, other than in the ordinary course consistent with past practice;
(x) amend or waive any provision of its certificate of incorporation or its by-laws, partnership agreement, operating agreement or other equivalent organizational documents or, in the case of the Company, enter into any agreement with any of its shareholders in their capacity as such (other than the Voting Agreement);
(xi) take or omit to take any action that is intended or would reasonably be expected to, individually or in the aggregate, result in any of the conditions to the Transaction set forth in ARTICLE VII not being satisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
(xii) enter into any “non-compete” or similar agreement that following the Closing would in any way restrict the businesses of the Buyer or its Affiliates or take any action that may impose new or additional material regulatory requirements on any Affiliate;
(xiii) implement or adopt any material change in its Tax or financial accounting methods principles, practices or practicesmethods, including without limitation other than as required by GAAP, applicable Law or regulatory guidelines;
(xiv) enter into any change closing agreement with respect to establishment material Taxes, settle or compromise any material liability for Taxes, make, revoke or change any material Tax election, agree to any adjustment of reserves any material Tax attribute, file or surrender any claim for unearned premiumsa material refund of Taxes, losses (including without limitation incurred but not reported losses) and loss adjustment expensesexecute or consent to any waivers extending the statutory period of limitations with respect to the collection or assessment of material Taxes, file any material amended Tax Return or obtain any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPmaterial Tax ruling;
(dxv) The except in connection with this Agreement, take any material action with respect to any Affiliate of the Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in that is outside the ordinary course of business consistent with past practice, practices (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter after taking into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by consideration the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company); provided, however, that notwithstanding any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practiceforegoing, the Company shall notbe permitted (after receipt of the Buyer’s consent, and which consent shall not permit any Company Subsidiary tobe unreasonably withheld, enter into any material contract delayed or amend conditioned) to terminate or waive any material provision reduce the salary of any material contract which would involve employee of the payment by the Company or any Company Subsidiary of $200,000 or moreCompany;
(lxvi) Other than notwithstanding anything in this Agreement to the ordinary course of business consistent with past practicecontrary, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire bonuses to any of the capital stock of the Company’s employees or consultants pursuant to any Company Benefit Plan, any employment agreement or any Company Subsidiaryconsulting agreement; andor
(txvii) Neither the Company nor agree to take, make any Company Subsidiary shall agreecommitment to take, or adopt any resolutions of its Board of Directors in writing or otherwisesupport of, to take any of the actions prohibited by the foregoing clauses (a) through (sthis Section 6.1(b).
Appears in 1 contract
Samples: Asset Purchase Agreement (Ivivi Technologies, Inc.)
Conduct of Business by the Company. The Company covenants and agrees as to itself that between the date of this Agreement and the Company Subsidiaries that, at all times up to and including the Merger Effective Time, except as set forth in Section 5.01(a) of the Company Disclosure Letter, as expressly provided for, permitted or required by any other provision of this Agreement or as required by applicable Law, by a Governmental Entity of competent jurisdiction or by the rules or requirements of the NYSE, unless Parent Gold shall otherwise consent in writing, writing (which consent shall not be unreasonably withheld, delayed or as otherwise expressly permitted or contemplated by this Agreement or as set forth on conditioned), the Company Disclosure Schedule:
(a) The Company shallwill, and shall will cause each Company Subsidiary to, (x) conduct its business only and operations in all material respects in the ordinary course of business and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall (y) use all commercially reasonable efforts to (I) preserve substantially intact its present business organization organization, keep available the services of its current officers and employees and preserve its regular services torelationships with significant Governmental Entities (including applicable Gaming Authorities), and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokerssuppliers, suppliers licensors, licensees, distributors, wholesalers, lessors and all others having significant business dealings with it;
; and (bII) Except maintain in effect all material Company Permits; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of this Section 5.01(a) shall be deemed a breach of clause (x) or clause (y) unless such action would constitute a breach of such specific provision. Without limiting the foregoing, except as contemplated set forth in Section 5.01(a) of the Company Disclosure Letter, as expressly provided for, permitted or required by any other provision of this AgreementAgreement or as required by applicable Law, by a Governmental Entity of competent jurisdiction or by the rules or requirements of the NYSE, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; between the date of this Agreement and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding Merger Effective Time, do any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or following without the prior written consent of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
Gold (c) The Company which consent shall not make any material change in accounting methods be unreasonably withheld, delayed or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;conditioned):
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter articles of incorporation, bylaws or by-laws (unless contemplated hereby), equivalent organizational documents;
(ii) incur any individual Liability issue, sell, pledge, dispose, encumber or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell grant any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
, or options, warrants or other securities convertible into, or exchangeable or exercisable for, any such shares of capital stock or other equity interests, any rights of any kind to acquire any such shares of capital stock or other equity interests or such options, warrants or other convertible or exchangeable securities or any rights relating to or based on the value of such capital stock or other equity interests, other than (fA) Except (x) as set forth in grants of purchase rights under the Company Disclosure Schedule, Stock Purchase Plan (ysubject to Section 5.12(e)) in the ordinary course of business consistent with past practice, or (zB) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due Retention Plan in accordance with its termsSection 5.12(f) or (C) the issuance of Company Shares upon the exercise of Company Options or purchase rights under the Company Stock Purchase Plan, or upon the vesting and settlement of Company Stock Unit Awards, in each case, including, but not limited to, any provision outstanding as of any Insurance Contract the date hereof or otherwise permitted to permit a cash-out thereofbe granted hereunder;
(iiii) The Company shall notsell, and shall not permit pledge, dispose of, transfer, lease, license or encumber any Company Subsidiary tomaterial property or material assets (other than, other than pursuant to for the operation avoidance of separate accounts doubt, sales, pledges, disposals, transfers, leases, licenses or encumbrances of inventory, supplies, materials, products in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract Contracts in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(qiv) The Company shall not(A) declare, nor shall the Company permit any Company Subsidiary toset aside, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind pay any material express dividend or deemed election relating to Taxesother distribution (whether payable in cash, (ii) make stock, property or a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iiicombination thereof) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in Company Securities (other than (I) the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the Company's ordinary course quarterly dividends to holders of business Company Shares in a per share amount no greater than the Company's most recently declared quarterly dividend, with record and consistent payment dates in accordance with past practice, neither the Company nor any Company's customary dividend schedule (II) dividends paid by a wholly owned Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of to the Company or any another wholly owned Company Subsidiary and (III) the Special Dividend) (B) split, combine, reclassify or redeem, purchase or otherwise acquire amend the terms of any shares of the capital stock or other equity interests of the Company or any Company Subsidiary; andor (C) redeem, purchase or otherwise acquire any shares of capital stock or other equity interests of the Company, except for any repurchases in connection with exercises of Company Options or Tax withholdings upon the vesting or payment of Company Stock Unit Awards;
(tv) Neither adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company nor or any Company Subsidiary (other than a merger of one or more Company Subsidiaries with or into, or the transfer of one or more Company Subsidiaries to, one or more other Company Subsidiaries);
(vi) acquire (including by merger, consolidation or acquisition of stock or assets) any interest in any person or any division or material amount of assets thereof, except with respect to acquisitions of interests in any person or any division or material amount of assets for consideration that is individually not in excess of $20 million and in the aggregate not in excess of $50 million;
(vii) incur any Indebtedness or issue any debt securities, or assume or guarantee the obligations of any person (other than a wholly owned Company Subsidiary), except (A) for borrowings in the ordinary course of business under the Company's existing credit facilities, (B) Indebtedness for borrowed money that is prepayable at any time without penalty or premium, in an amount not to exceed $20 million in the aggregate or (C) borrowings permitted pursuant to Section 5.16(b);
(viii) make any loans, advances or capital contributions to, or investments in, any other person (other than any wholly owned Company Subsidiary) in excess of $20 million in the aggregate;
(ix) materially modify, amend, cancel or terminate or waive, release or assign any material rights or claims with respect to, any Company Material Contract or enter into any Contract which, if entered into prior to the date hereof, would be a Company Material Contract, in each case, other than in the ordinary course of business or, for the avoidance of doubt, as permitted by any other clause of this Section 5.01(a);
(x) except to the extent required by Law or the terms of any Company Benefit Plan as in effect as of the date of this Agreement or as specifically contemplated by this Agreement: (A) other than in the ordinary course of business, increase the compensation or benefits payable or to become payable to its directors, officers or employees; (B) other than in the ordinary course of business, grant any rights to severance or termination pay, enter into any employment or severance agreement, or establish, adopt, enter into or amend any collective bargaining agreement or Company Benefit Plan; (C) take any action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Company Benefit Plan; or (D) pay or award, or commit to pay or award, any bonuses or incentive compensation, other than at times and in amounts in the ordinary course of business, consistent with past practice;
(xi) change (or file a request to change) any material method of Tax accounting, any annual Tax accounting period, make, change or revoke any material Tax election, settle or compromise any material liability for Taxes or file any material amended Tax Return;
(xii) make any material change in accounting policies or procedures in effect as of March 29, 2014, other than as required by GAAP (or any interpretation or enforcement thereof), Regulation S-X of the Exchange Act or a Governmental Entity or quasi-Governmental Entity (including the Financial Accounting Standards Board or any similar organization) or applicable Law;
(xiii) make any capital expenditures (excluding, for the avoidance of doubt, capitalized software development costs) after the date hereof that exceed the amounts contemplated by the Company's capital expenditure budget previously made available to Gold by more than $15 million in the aggregate; provided, however, that the Company and any Company Subsidiary shall agreebe permitted to make emergency capital expenditures in any amount that the Company determines is necessary in its reasonable judgment to maintain its ability to operate its business in the ordinary course;
(xiv) waive, in writing release, assign, settle or otherwisecompromise any Proceeding, affecting the Company or any Company Subsidiary (other than any Proceeding concerning this Agreement), other than any such waiver, release, assignment, settlement or compromise of a Proceeding (a) where the amounts paid or to take be paid (A) do not exceed established reserves for such Proceedings as of the date hereof by more than $15 million or (B) are funded, subject to payment of a deductible, by insurance coverage maintained by the Company or its Subsidiaries and (b) that does not include any equitable relief that would be material and adverse to the conduct of the business of the Company and the Company Subsidiaries, taken as a whole;
(xv) fail to maintain insurance consistent with past practice and of a size and scope that is reasonable for the business of the Company and the Company Subsidiaries, taken as a whole; or
(xvi) authorize, commit to or enter into any Contract to do any of the actions prohibited by foregoing. Nothing contained in this Agreement shall give Gold, Holdco or Sub, directly or indirectly, the foregoing clauses (a) through (s)right to control or direct the operations of the Company prior to the Company Merger Effective Time. Prior to the Company Merger Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete unilateral control and supervision over its business operations.
Appears in 1 contract
Conduct of Business by the Company. (a) The Company covenants and agrees as to itself that, between the date of this Agreement and the Closing or the earlier termination of this Agreement, except as (1) contemplated or permitted by any other provision of this Agreement or any Ancillary Agreement, (2) set forth in Section 5.01 of the Company Subsidiaries thatDisclosure Schedule, at all times up to and (3) required by applicable Law (including the Effective Timeas may be requested or compelled by any Governmental Authority) or prevalent industry standard (including during any emergency), unless Parent SPAC shall otherwise consent in writing, writing (which consent shall not be unreasonably withheldconditioned, withheld or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:delayed):
(ai) The the Company shall, and shall cause each the Company Subsidiary Subsidiaries to, conduct its their business only in the ordinary course and of business and, since January 17, 2020, in substantially the same a manner as heretofore conducted since December 31, 1999, and consistent with past practice; and
(ii) the Company and each Company Subsidiary shall use all its commercially reasonable efforts to preserve substantially intact its present the business organization of the Company and the Company Subsidiaries and to preserve its regular services to, the current relationships of the Company and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment the Company Subsidiaries with customers, brokersSuppliers and other persons, suppliers and all others having with which the Company or any Company Subsidiary has significant business dealings with it;relations.
(b) Except By way of amplification and not limitation, except as (i) expressly contemplated or permitted by any other provision of this Agreement or any Ancillary Agreement, (ii) as set forth in Section 5.01 of the Company Disclosure Schedule, and (iii) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), the Company shall not, and shall not permit any cause each Company Subsidiary not to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; between the date of this Agreement and the Company agrees that it will notify Parent and provide Parent Closing or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of SPAC (which consent shall not be unreasonably conditioned, withheld or delayed):
(i) amend or otherwise change its certificate of formation or operating agreement or equivalent organizational documents;
(ii) other than in connection with information in reasonable detail regarding the incurrence of indebtedness permitted hereunder, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets equity interests of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesSubsidiary, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Lawwarrants, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement convertible securities or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests insuch equity interests, or to receive any payment based on the value ofother ownership interest (including, the capital stock without limitation, any phantom interest), of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fiii) Except (x) as set forth sell or otherwise dispose of any material assets other than in the ordinary course of business;
(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, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its equity interests; provided that if Holdings or any of its affiliates (other than the Company Disclosure Scheduleand the Company Subsidiaries) contributes or loans any amounts to the Company or any Company Subsidiary prior to Closing, and such amounts are not spent by the Company or such Company Subsidiary prior to Closing, the Company and the Company Subsidiaries shall be entitled to distribute or repay, as applicable, such unexpended amounts to Holdings immediately prior to Closing;
(yvi) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its equity interests;
(vii) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or any other business combination) all or substantially all of the assets of any corporation, partnership, other business organization or any division thereof; or (B) other than the Intercompany Debt, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, such obligations of any person, or make any loans or advances, or intentionally grant any security interest in any of its assets;
(viii) except in the ordinary course of business consistent with past practice(including health and welfare plan renewals), or (z) as may be required by applicable Law or the terms of agreements or plans already an existing Employee Benefit Plan, as is necessary in effect or Applicable Laworder to consummate the Transactions, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase as set forth in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, and as is reasonably determined by the Company to be advisable in connection with the Company’s preparation to be a public company with common equity that is listed on the New York Stock Exchange (the “NYSE”) or Nasdaq Capital Markets (“Nasdaq”), as contemplated mutually agreed by this Agreement, enter into, adopt the parties pursuant to Section 6.10 (including hiring or increase any indemnification or hold harmless arrangements with any directors, officers or other retaining employees or agents of such party consultants in connection therewith) or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated herebyTransactions, and expenditures required to be made pursuant to existing contracts to which the Company or adopt, amend and/or terminate any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each casePlan, including, but not limited to, by (A) granting any provision material increase in compensation, incentives or benefits payable or to become payable to any current or former director or officer, (B) entering into any new, or materially amending any existing, employment, retention, bonus, change in control, severance or termination agreement with any current or former director or officer, or (C) accelerating or committing to accelerate the funding, payment, or vesting of any Insurance Contract compensation or benefits to permit a cash-out thereofany current or former director or officer;
(iix) The Company shall not, materially amend (other than reasonable and shall not permit usual amendments in the ordinary course of business or amendments made in connection with any Company Subsidiary toTransactions) any accounting policies or procedures, other than pursuant as required by GAAP;
(x) except with respect to matters set forth on Section 3.14 of the Company Disclosure Schedule: (A) amend any material Tax Return, (B) change any material method of Tax accounting, (C) make, change or rescind any material election relating to Taxes, (D) settle or compromise any material U.S. federal, state, local or non-U.S. Tax audit, assessment, Tax claim or other controversy relating to Taxes, (E) surrender any right to claim a Tax refund, or (F) enter into any Tax sharing, allocation, indemnity or similar agreement (except for any agreement the principal purpose of which is not related to Taxes);
(xi) materially amend, modify or consent to the operation termination (excluding any termination in accordance with its terms) of separate accounts any Material Contract or amend, waive, modify or consent to the termination (excluding any termination in accordance with its terms) of the Company’s or any Company Subsidiary’s material rights thereunder, in each case in a manner that is materially adverse to the Company or any Company Subsidiary, taken as a whole, except in the ordinary course of business;
(xii) intentionally permit any material and useful item of Company-Owned IP to lapse or to be abandoned, consistent with existing strategiesinvalidated, (i) selldedicated to the public, leaseor disclaimed, mortgage, encumber or otherwise grant become unenforceable or fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees required or advisable to maintain and protect its interest in or dispose each and every material item of any of its Assets whichCompany-Owned IP other than, individually or in each case, in the aggregate, are material ordinary course of business;
(xiii) except to the financial condition of the Company, extent not ultimately resulting in any Company Subsidiary, or liability to the Company and the Company Subsidiaries taken as a wholeSubsidiaries, andwaive, release, assign, settle or compromise any material Action, other than waivers, releases, assignments, settlements or compromises that are solely monetary in addition, nature and do not exceed $500,000 individually or $2,500,000 in the case of Liens, for Permitted Liens (as defined below) and Liens not individually aggregate in excess of $100,000 and not aggregating in excess any insurance proceeds paid with respect to any such amounts without giving SPAC reasonably prompt written notice of $200,000 the material terms thereof following any such action; or
(xiv) enter into any binding agreement or otherwise make a binding commitment with respect to any of the foregoing. Nothing herein shall require the Company to obtain consent from SPAC to do any of the foregoing (i) if obtaining such consent might reasonably be expected to violate applicable Law or (ii) restructure, amend, modify or otherwise affect any Investment Asset in response to COVID-19 Measures or any contract relating thereto which is material emergency, and nothing contained in this Section 5.01 shall give to SPAC, directly or indirectly, the financial condition right to control or direct the ordinary course of business operations of the Company, Company or any Company Subsidiary, or the Company and of the Company Subsidiaries taken as a wholeprior to the Closing Date. Prior to the Closing Date, and, in either case described in clauses (i) and (ii), only in accordance with the statement each of investment policy set forth in the Company Disclosure Schedule; SPAC and the Company shall furnish to Parent a monthly reportexercise, in detail reasonably acceptable to Parentconsistent with the terms and conditions hereof, complete control and supervision of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets its respective operations. Without limiting the ability of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any such action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision use commercially reasonable efforts to notify SPAC on a monthly basis of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than Material Contracts entered into in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)prior calendar month.
Appears in 1 contract
Samples: Business Combination Agreement (Climate Change Crisis Real Impact I Acquisition Corp)
Conduct of Business by the Company. (a) The Company covenants agrees that it shall, and agrees shall cause Sio NewCo to, during the period from the date of this Agreement and continuing until the earlier of (x) the Closing and (y) the valid termination of this Agreement pursuant to Section 8.01 (the “Interim Period”), except (1) as to itself and may be required or expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 5.01 of the Company Subsidiaries thatDisclosure Schedule, at all times up (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority) (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (3), the Company shall use reasonable best efforts to provide advance notice to and including consult with SPAC (if reasonably practicable) prior to taking such actions), or (4) to the Effective Time, unless Parent extent that SPAC shall otherwise consent in writing, writing (which consent shall not be unreasonably withheldconditioned, withheld or delayed); provided that SPAC shall be deemed to have consented in writing if it provides no response within seven (7) days after the Company has made a request for such consent in writing:
(i) conduct its business in the Ordinary Course; and
(ii) use its reasonable best efforts to preserve substantially intact the business organization of the Company, to keep available the services of the current officers, key employees, service partners and consultants of the Company, to preserve the current relationships of the Company with customers, Suppliers and other Persons with which the Company has significant business relations, and to maintain in effect all Mineral Rights, Leased Real Property and Company Permits and Insurance Policies (in such amounts and with such deductibles as otherwise are currently maintained).
(b) By way of amplification and not limitation, except (1) as may be required or expressly permitted or contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth on in Section 5.01 of the Company Disclosure Schedule:
, (a3) The as required by applicable Law (including as may be requested or compelled by any Governmental Authority), and (4) for any actions taken reasonably and in good faith to respond to Emergency Actions (provided that prior to taking any material actions that the Company shallintends to take, to the extent the Company intends to take such actions in reliance on this clause (4), the Company shall use, and shall cause each Company Subsidiary toSio NewCo to use, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable best efforts to preserve intact its present business organization provide advance notice to and preserve its regular services toconsult with SPAC (if reasonably practicable), prior to taking such actions and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreementshall otherwise promptly inform SPAC upon taking any such action), the Company shall not, and shall cause Sio NewCo not permit to, during the Interim Period, directly or indirectly, do any of the following without the prior written consent of SPAC (which consent shall not be unreasonably conditioned, withheld or delayed), provided that SPAC shall be deemed to have consented in writing if it provides no response within five (5) Business Days after the Company has made a request for such consent in writing:
(i) amend or otherwise change any organizational documents of the Company or Sio NewCo;
(ii) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or Sio NewCo;
(iii) other than (1) the issuance of Company Common Shares in an aggregate amount of up to $10,000,000 (the “Interim Company Shares”) and (2) entering into subscription agreements with one or more investors, pursuant to which, among other things, Sio NewCo will issue and sell to each such investor on the Closing Date (after giving effect to the SPAC Amalgamation) a number of flow-through New SPAC Class A Common Shares (the “Flow-Through Shares”) as set forth in each such subscription agreement in an aggregate amount of up to $10,000,000, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any Equity Interests of the Company or Sio NewCo, or any options, warrants, convertible securities or other rights of any kind to acquire any Equity Interest (including, without limitation, any phantom interest), of the Company or Sio NewCo; or (B) any material assets of the Company or Sio NewCo, other than pursuant to the exercise or settlement (as applicable) of Company Options, Company RSUs or Company Warrants, that are outstanding as of the date of this Agreement in accordance with their terms;
(iv) form any Subsidiary toor 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, make or propose pay any dividend or other distribution, payable in cash, stock or shares, property or otherwise, with respect to any of its Equity Interests;
(vi) reclassify, combine, consolidate, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its Equity Interests other than purchases of Company Common Shares in satisfaction of the payment of the exercise price or tax withholdings upon the exercise or vesting of Company Options or Company RSUs in accordance with their terms;
(vii) (A) acquire (including without limitation, by merger, consolidation or acquisition of stock or shares or substantially all of the assets or any other business combination) any corporation, partnership, other business organization or any division thereof; (B) other than incurring Indebtedness of up to, in the aggregate, three million dollars ($3,000,000), 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 other than the reimbursement of expenses of employees in the Ordinary Course, or intentionally grant any security interest in any of its assets; or (C) merge, consolidate, combine or amalgamate with any Person;
(viii) other than in the Ordinary Course, as required under the terms of any Employee Benefit Plan in effect on the date hereof (or any Employee Benefit Plan adopted or amended after the date hereof in accordance with this Agreement) or as contemplated by clause (a) above, (A) grant any increase in the compensation, incentives or benefits payable or to become payable to any current or former director, officer, employee or independent contractor receiving annual compensation equal to or greater than $100,000, (B) enter into any new or materially amend any existing, employment, retention, bonus, change in control, severance, redundancy or termination agreement with any current or former director, officer, employee or independent contractor receiving annual compensation equal to or greater than $100,000, (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 independent contractor, (D) establish or become obligated under any collective bargaining agreement, collective agreement, or other Contract with a labor union, trade union, works council, industrial organization, or similar representative of employees; (E) hire any new employees holding an executive position; or (E) transfer or terminate the employment or engagement of any employee holding an executive position other than any such termination for cause;
(ix) adopt, amend and/or terminate any material Employee Benefit Plan except as may be required by applicable Law, or is necessary in order to consummate the Transactions, or health and welfare plan renewals in the Ordinary Course;
(x) make any change in any method of financial accounting or financial accounting principles, policies, procedures or practices, except as required by a concurrent amendment in IFRS or applicable Law made subsequent to the date hereof, as agreed to by its dividend practices or policies independent accountants, or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in the Ordinary Course;
(xi) (A) amend any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding Tax Return, (B) change any material transactions method of Tax accounting, (excluding investment transactions C) make, change or rescind any material election relating to Taxes, (D) settle or compromise any Tax audit, assessment, Tax claim or other controversy relating to a material amount of Taxes, (E) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) in respect of a material amount of Taxes or enter into any Tax sharing or similar agreement (other than customary commercial Contracts entered into in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect primarily related to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated herebyTaxes), (iiF) surrender or allow to expire any right to claim a refund of Taxes, (G) extend or waive any statute of limitations applicable to any period within which a claim, assessment or reassessment of a material amount of Taxes may be issued or in respect of any material Tax attribute that would reasonably be expected to give rise to any claim or assessment of Taxes, (H) incur any individual Liability or series of related Liabilities in excess of $200,000 liability for Taxes other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (xI) modify prepare any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests Tax Return in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any a manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent inconsistent with past practice;
(oxii) The Company shallother than in the Ordinary Course, and shall cause each Company Subsidiary to(A) amend, maintain uninterrupted or modify or consent to the termination (excluding any expiration in accordance with its existing insurance coverage terms) of, any Material Contract or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of all types in effect the Company’s material rights thereunder, or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage (B) enter into any Contract that would have been a Material Contract had it been entered into prior to the failure to so keep would not have a Company Material Adverse Effectdate of this Agreement;
(pxiii) The materially amend or modify any Mineral Right or terminate any Mineral Right or Company shall deliver Permit;
(xiv) other than in the Ordinary Course, allow to Parent lapse, abandon, fail to maintain the existence of, or fail to use commercially reasonable efforts to protect, its interest in, and the existence and enforceability of, Company-Owned IP to the extent such Company-Owned IP remains material to the conduct of the businesses of the Company;
(xv) enter into any material new line of business outside of the business currently conducted by the Company as promptly as practicable after of the filing thereof date of this Agreement;
(xvi) voluntarily fail to maintain, cancel or materially change coverage under any material insurance policy in form and amount equivalent in all material respects to the insurance coverage currently maintained with applicable regulatory authoritiesrespect to the Company and its assets and properties;
(xvii) fail to keep current and in full force and effect, unaudited or auditedto comply in all material respects with the requirements of, as any Company Permit that is material to the case may be, SAP Statements filed by or on behalf conduct of the business of the Company or any Company Subsidiary after the date hereofas currently conducted;
(qxviii) The Company waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that are solely monetary in nature and do not exceed $100,000 individually or $500,000 in the aggregate; or
(xix) enter into any formal or informal agreement or otherwise make a binding commitment to do any of the foregoing. Nothing herein shall not, nor shall require the Company permit or Sio NewCo to obtain consent from SPAC to do any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of foregoing if obtaining such consent might reasonably be expected to violate applicable Law, and nothing contained in this Section 5.01 shall give to SPAC, directly or indirectly, the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make right to control or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in direct the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock operations of the Company or any Company Subsidiary or redeemprior to the Closing Date. Prior to the Closing Date, purchase or otherwise acquire any each of the capital stock of SPAC and the Company or any Company Subsidiary; and
(t) Neither shall exercise, consistent with the Company nor any Company Subsidiary shall agreeterms and conditions hereof, in writing or otherwisecomplete control and supervision of its respective operations, to take any of the actions prohibited as required by the foregoing clauses (a) through (s)Law.
Appears in 1 contract
Samples: Business Combination Agreement (Pyrophyte Acquisition Corp.)
Conduct of Business by the Company. The Company covenants and agrees Except (x) as to itself and set forth in Section 5.1(a) of the Company Subsidiaries thatDisclosure Letter, at all times up to and including the Effective Time, unless Parent shall otherwise consent (y) in writing, which consent shall not be unreasonably withheldconnection with any action taken, or omitted to be taken, pursuant to any COVID-19 Measures or which is otherwise taken, or omitted to be taken, in response to COVID-19, as determined by the Company in its reasonable discretion after providing at least two business days’ written notice to Parent prior to taking or omitting to take such action or (z) as otherwise expressly permitted or contemplated by this Agreement or as set forth on consented to by Parent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Company Disclosure Schedule:
(a) The period from the date of this Agreement to the Effective Time, the Company shall, and shall cause each Company Subsidiary its subsidiaries to, conduct its business only carry on their respective businesses in the ordinary course and in substantially consistent with past practice and, to the same manner as heretofore conducted since December 31extent consistent therewith, 1999, and the Company and each Company Subsidiary shall use all reasonable best efforts to preserve intact its present their current business organization organizations, preserve their assets and properties in good repair and condition, use reasonable best efforts to keep available the services of their current officers and other key employees and preserve its regular services to, and maintain its their relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others with those persons having business dealings with it;
(b) them to the end that their goodwill and ongoing businesses shall be unimpaired at the Effective Time. Except as set forth in Section 5.1(a) of the Company Disclosure Letter or as otherwise expressly contemplated by this AgreementAgreement or as consented to by Parent in writing (such consent not to be unreasonably withheld or delayed), during the period from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions by a direct or indirect wholly-owned subsidiary of the Company Subsidiary toto its shareholder(s), declare, set aside or pay any dividends on, make any other distributions in respect of, or propose enter into any agreement with respect to make the voting of, any change of its capital stock, except the Company’s regular quarterly dividend on Company Common Shares in accordance with the Company’s dividend policy (but subject to Section 6.17), in a quarterly amount not to exceed the amount set forth in Section 5.1(a)(i) of the Company Disclosure Letter;
(ii) (A) split, combine or reclassify any of its dividend practices shares or policies issue or authorize the issuance of any other securities in respect of, in lieu of or in its underwritingsubstitution for shares, pricing(B) purchase, claims, risk retention, investment, reinsurance practices redeem or policies in otherwise acquire any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets shares of the Company or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, except, solely with respect to clause (B), the acquisition of shares from a holder of a Company Equity Award under a Company Equity Plan in satisfaction of withholding obligations or in payment of the exercise price in accordance with the terms thereof or in connection with the forfeiture of any equity or equity-based awards granted under a Company Subsidiary and transactions involving derivative securities), whether involving a purchase Equity Plan that are outstanding on the date of this Agreement or sale, that it (C) amend any term or alter any rights of any outstanding equity securities of the Company Subsidiary is seriously consideringor its subsidiaries;
(ciii) The Company shall not make issue, deliver, sell, pledge or otherwise encumber or subject to any material change in accounting methods Lien any of its shares, any other voting securities or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensessecurities convertible into, or any change rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than (A) in depreciation or amortization policies or rates adopted by it, except connection with the settlement of Company Equity Awards granted under the Company Equity Plans and outstanding as required by Applicable Law, GAAP or SAPof the date of this Agreement in accordance with their present terms and (B) Company Equity Awards granted in accordance with Section 5.1(a)(x)(C));
(div) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur enter into any indebtedness for money borrowed in contract that would be a Company Material Contract if entered into prior to the aggregate for the Company and the Company Subsidiaries in excess date hereof, or amend, renew, terminate or waive any material provision of $200,000 for any such indebtedness having contract or any Company Material Contract except in connection with any amendments to, and normal renewals of, Company Material Contracts without materially adverse changes, additions or deletions of terms;
(A) merge with or enter into a maturity of 90 days consolidation with or less otherwise acquire any equity interests in any person, or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or acquire a substantial portion of its Assetsthe assets or business of any person (or any division or line of business thereof), bulk (B) authorize, recommend, propose or assumption reinsurance arrangement announce an intention to adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or any other similar reorganization, arrangement (C) otherwise acquire (including, through leases, subleases and licenses of real property) any assets, or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (viD) enter into any contract limiting the ability new line of business that is material to the Company or and its subsidiaries (taken as a whole), except (w) in the case of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Personclauses (A), (viiB) enter into any contract relating to and (C), transactions solely among the direct Company and one or indirect guarantee more of any obligation its wholly owned subsidiaries or solely among the Company’s wholly owned subsidiaries, (x) in the case of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than clause (C) in the ordinary course of business consistent with past practice, (viiiy) enter into any contract that is reasonably likely to materially in the case of clauses (A) and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined belowC), in one or (x) modify any contract more transactions with respect to which the aggregate consideration for all such transactions during the period from the date of this Agreement to the Closing Date does not exceed $100,000,000 and (z) each of clauses (A), (B) and (C) are subject of any of to the foregoing clausesrestrictions set forth in Section 6.3;
(evi) The Company shall not(A) transfer, nor shall it permit any Company Subsidiary tosell, issue lease, sublease, license, sublicense, grant a non-assert with respect to or sell any shares of otherwise abandon or interests in, or rights dispose of any kind to acquire any shares material assets or material properties of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practiceits subsidiaries, or (zB) as required by the terms mortgage or pledge any material assets or material properties of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries subsidiaries, or subject any such assets or properties to any other Person;
Lien (g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary toPermitted Liens), other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in additionthan, in the case of Liens, for Permitted Liens both clause (as defined belowA) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or clause (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment AssetsB), (iix) the sale or transfer of any assets and properties associated with discontinued operations or (y) non-publicly traded securities in excess of $1,000,000 per transaction exclusive licenses or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or sublicenses granted in the ordinary course of business and consistent with past practice;
(ovii) The Company shallcreate, and shall cause each Company Subsidiary toincur or assume any indebtedness for borrowed money, issue any debt securities or any right to acquire debt securities, assume, guarantee, endorse or otherwise become liable or responsible (whether, directly, contingently or otherwise) for the indebtedness of another person, enter into any agreement to maintain uninterrupted its existing insurance coverage any financial condition of all types in another person or enter into any arrangement having the economic effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is availableof any of the foregoing, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(pA) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than indebtedness incurred in the ordinary course of business and consistent with past practicepractice under the Company’s current borrowing agreements and facilities not to exceed $500,000,000 in the aggregate, neither (B) any inter-company indebtedness in the ordinary course of business consistent with past practice solely involving the Company nor any Company Subsidiary and/or its direct or indirect wholly-owned subsidiaries, (C) indebtedness to replace or refinance existing credit facilities or other existing indebtedness, in each case at maturity and without increasing the principal amount thereunder (except to the extent such increase represents accrued interest and fees and expenses on the refinanced indebtedness and customary underwriting, arrangement, or similar fees and related expenses), provided that no such refinancing indebtedness shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of subject the Company or any of its subsidiaries to material prepayment obligations or other penalties, or (D) guarantees by the Company Subsidiary of indebtedness for borrowed money of its subsidiaries, which indebtedness is otherwise incurred in compliance with this Section 5.1(a)(vii);
(viii) without limiting Section 6.13, waive, release, assign, settle or redeem, purchase compromise any pending or otherwise acquire any threatened Action other than (A) the settlement of such Actions involving only the capital stock payment of monetary damages by the Company or any Company Subsidiary; andof its subsidiaries of any amount not to exceed $10,000,000 individually or $30,000,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct by the Company, Parent or their respective affiliates or a finding or admission of a violation of Law by the Company, Parent or their respective affiliates;
(tix) Neither (A) make, change or revoke any material Tax election, (B) settle or compromise any material Tax audit, claim or liability in an amount materially in excess of the amount reserved therefor in the Company nor Financial Statements as of the date hereof, (C) amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, (D) enter into any material closing agreement (or similar agreement) related to Taxes, (E) knowingly surrender any right to claim any material Tax refund or (F) change (or make a request to any Taxing Authority to change) any material aspect of its method of accounting for Tax purposes;
(x) except as required by Applicable Law or any Company Subsidiary Benefit Plan, (A)increase the compensation or benefits payable or to be provided to any of its directors, officers, employees or consultants (other than increases in annual base salaries and incentive compensation opportunities at times and in amounts in the ordinary course of business consistent with past practice, excluding increases for any individual at the level of senior vice president or above (except for such increases previously provided to Parent); provided, that the aggregate increases in base salary for all individuals below the level of senior vice president shall agreenot exceed 3.1% of the Company’s total compensation budget for fiscal year 2020 in the aggregate, (B)grant or increase to any of its directors, officers, employees or consultants any severance, termination, change in writing control or otherwiseretention pay (other than the payment of severance in connection with the termination of employment of employees occurring in the ordinary course of business consistent with past practice and based on the terms of the applicable Company Benefit Plan as in effect on the date of this Agreement), (C)grant any equity or equity-based awards, (D) pay or award, or commit to pay or award, any cash bonuses or cash incentive compensation (other than the payment of accrued and unpaid cash bonuses or other cash incentive compensation in the ordinary course of business consistent with past practice), (E)enter into any employment, severance, retention or change in control agreement with any of its directors, officers, employees or consultants (other than offer letters that do not provide for severance, retention or change in control payments or benefits, and severance or separation agreements entered into in connection with severance payments to be made in accordance with clause (B) above), (F) establish, adopt, enter into, amend or terminate any collective bargaining agreement or Company Benefit Plan (or a plan or arrangement that would be a Company Benefit Plan if in existence as of the date hereof), (G)take any action to accelerate any payment or benefit, or the funding of any payment or benefit, payable or to be provided to any of its directors, officers, employees or consultants or (H) hire any officer or employee at the level of vice president or above or any individual consultant with annual compensation in excess of $300,000;
(xi) change any of its material financial accounting policies or procedures currently in effect, except (A) as required by GAAP, Regulation S-X of the Exchange Act, or a Governmental Entity or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization) as determined in consultation with the Company’s outside auditor, or (B) as required by Applicable Law;
(xii) make or authorize any payment of, commitment for, or accrual of aggregate capital expenditures for any 12-month period that are greater than 110% of the amount set forth on Section 5.1(a)(xii) of the Company Disclosure Letter;
(xiii) other than in respect of and limited to the exchange of Parent Common Shares (and any cash in lieu of fractional shares) for Company Common Shares pursuant to the Merger, enter into any agreement with the EBT Trustee, provide any form of recommendation, instruction, expression of wishes or request to the EBT Trustee which may cause or have the intention of causing the EBT Trustee to take action or to enter into any agreement in relation to the EBT Shares, including in relation to the satisfaction of any Company Equity Awards, nor file, or amend, a registration statement on Form S-8 (or any successor or other appropriate form) of the Company in order to register any of the actions prohibited by EBT Shares or otherwise transfer any of the EBT Shares;
(xiv) amend the Company Certificate of Incorporation, Company Memorandum of Association or Company Bye-laws; or
(xv) authorize, or commit or agree to take, any of the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (IHS Markit Ltd.)
Conduct of Business by the Company. The Company covenants Pending the Merger. Following the date of this Agreement and agrees as prior to itself the earlier of the Effective Time and the Company Subsidiaries thatdate on which this Agreement is terminated pursuant to Section 9.1, at all times up except as may be consented to and including the Effective Time, unless Parent shall otherwise consent in writing, writing by Verizon (which consent shall not be unreasonably withheld, conditioned or delayed) or as otherwise expressly permitted or contemplated by this a Transaction Agreement or as set forth on in Section 7.1 of the Company Disclosure Schedule:
(a) The Letter, the Company shall, covenants and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and agrees that the Company and each of the Company Subsidiary Subsidiaries shall conduct its operations in accordance with its ordinary course of business, consistent with past practice and in compliance with all Laws applicable to it or to the conduct of its business, and use all commercially reasonable efforts to preserve intact its present business organization organization, maintain rights and franchises, keep available the services of its current officers and key employees and preserve its regular services torelationships with customers and vendors in such a manner that its goodwill and ongoing businesses would not reasonably be anticipated to be impaired in any material respect. Following the date of this Agreement and prior to the earlier of the Effective Time and the date on which this Agreement is terminated pursuant to Section 9.1 (and notwithstanding the immediately preceding sentence) except (i) as may be required by Law or to comply with any Order relating to the transactions contemplated hereby, and maintain its relationships with(ii) as may be consented to in writing by Verizon (which consent shall not be unreasonably withheld, policyholdersconditioned or delayed, insurersexcept in the case of clauses (a), reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except and (d) and, in respect of the foregoing clauses, (p) of this Section 7.1, with respect to which such consent may be withheld in Verizon’s sole discretion), (iii) as may be expressly contemplated by this AgreementAgreement or the other Transaction Agreements, or (iv) as set forth in Section 7.1 of the Company Disclosure Letter, the Company shall not, nor shall it permit any of the Company Subsidiaries to:
(a) (i) declare or pay any dividends on or make other distributions in respect of any shares of its capital stock or partnership interests (whether in cash, securities or property), except for the declaration and payment of (A) cash dividends or distributions paid on or with respect to a class of capital stock or partnership interests all of which shares of capital stock or partnership interests, as the case may be, of the applicable corporation or partnership are owned directly or indirectly by the Company and (B) regular quarterly dividends on the Company Common Stock each quarter in an amount not to exceed $0.25 per share at times consistent with the dividend payment practices of the Company in 2008 (including a final partial regular quarterly dividend to the extent permitted under the Company Credit Agreements and paid from existing funds or existing borrowing capacity, to be declared and paid to pre-Closing Company stockholders, pro rated for the number of days elapsed between (x) the beginning of the quarterly period in which the Effective Time occurs and (y) the day immediately preceding the Effective Time); (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock; or (iii) redeem, repurchase or otherwise acquire, or permit any Subsidiary to redeem, repurchase or otherwise acquire, any shares of its capital stock (including any securities convertible or exchangeable into such capital stock), except (A) pursuant to the terms of the securities outstanding on the date hereof or any securities issued after the date hereof not in violation of this Agreement and (B) pursuant to the existing terms of a Company Benefit Plan or any awards thereunder outstanding on the date hereof or granted thereunder after the date hereof in accordance with this Agreement; provided, however, that this Section 7.1(a) shall not permit prohibit any such action effected pursuant to the Rights Plan; Table of Contents
(b) issue, deliver or sell, or authorize any shares of its capital stock of any class, any Company Voting Debt or any securities convertible into, or any rights, warrants or options to acquire, any such shares or other Company Voting Debt or convertible securities, other than (i) pursuant to the Rights Plan, (ii) the issuance of shares of Company Common Stock upon the exercise of stock options or the vesting of restricted stock units that are outstanding on the date hereof pursuant to the Company Benefit Plans or granted after the date hereof pursuant to clause (iv) below; (iii) issuances by a wholly-owned Subsidiary to, make of the Company of its capital stock to such Subsidiary’s parent or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respectanother wholly-owned Subsidiary of the Company; and (iv) the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions granting of stock options, or the granting of restricted stock units or restricted stock in the ordinary course of business business, consistent with the Company’s past practicepractices, but including transactions involving provided that in no event shall the securitization vesting and exercisability of Assets any such newly granted option, restricted stock unit or restricted stock accelerate or shall any additional rights be conveyed with respect thereto on account of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringcontemplated hereby;
(c) The amend the Company’s certificate of incorporation or bylaws (other than amend the Company’s certificate of incorporation to increase the number of authorized shares of Company shall not make any material change Common Stock in accounting methods or practices, including without limitation any change connection with respect to establishment the issuance of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesthe Aggregate Merger Consideration), or amend any change Company Subsidiary’s certificate of incorporation or bylaws (or other similar organizational documents) in depreciation any manner that would prevent or amortization policies materially impair or rates adopted delay the consummation of the transactions contemplated by it, except as required by Applicable Law, GAAP or SAP;this Agreement; Table of Contents
(d) The acquire or agree to acquire by merger or consolidation, or by purchasing a substantial or controlling equity interest in, or the assets of, or by any other manner, any business or any corporation, partnership, limited liability entity, joint venture, association or other business organization or division or business unit thereof or otherwise acquire or agree to acquire any assets (other than the acquisition of equipment and other assets used in the operations of the business of the Company shall notin the ordinary course consistent with past practice);
(e) sell, and shall not permit lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of the Company Subsidiary to, but excluding (i) amend its charter or by-laws (unless contemplated hereby)surplus real property not used in telephone operations, (ii) incur any individual Liability or series of related Liabilities inventory and obsolete equipment, in excess of $200,000 other than each case, in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for Lien required to be created pursuant to the Company Credit Agreements and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree Permitted Encumbrances);
(f) incur any Indebtedness or guarantee or otherwise become contingently liable for any Indebtedness or issue or sell any debt securities or warrants or rights to acquire any merger, consolidation, demutualization, acquisition, redomestication, sale debt securities of all the Company or a substantial portion any of its Assets, bulk Subsidiaries or assumption reinsurance arrangement guarantee any debt securities of others or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture Lease (whether such Lease is an operating or profit sharing contractcapital Lease) or enter into any interest rate hedge, other than contracts with insurance agents in (i) the ordinary course incurrence of business consistent with past practicesIndebtedness under the Company Credit Agreements, (viii) enter into subject to clause (g) below, in order to refinance any contract limiting the ability Indebtedness of the Company or any of its Subsidiaries outstanding as of the date hereof, provided that any Company Subsidiary to engage in any business, to compete such refinancing shall be unsecured and shall not include covenants or other terms that would conflict with any Person, to do business with any Person or in any location preclude the Special Payment Financing or to employ any Personthe Spinco Securities, (viiiii) enter pursuant to any customer Contract, vendor Contract or real property Lease entered into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (yiv) in the ordinary course of business consistent connection with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts equipment leasing in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) past practice and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish v) Indebtedness owed to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportof its Subsidiaries;
(jg) The Company agrees that it shall notwithout limiting clause (f) above, nor shall it permit from and after March 1, 2010, offer or solicit or engage in any Company Subsidiary to, other than pursuant to the operation discussion or negotiations concerning any potential issuance of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment debt securities by the Company or its Subsidiaries (or the Surviving Corporation), or authorize any Company Subsidiary marketing of $200,000 or moreany potential issuance of debt securities other than the Special Payment Financing and the issuance of the Spinco Securities;
(lh) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investmentsbusiness, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither incur or commit to capital expenditures or obligations or liabilities in connection with any capital expenditure in the Company nor any Company Subsidiary shall declareaggregate in excess of $10,000,000, set aside other than (i) capital expenditures or pay any dividends obligations or distributions liabilities in connection therewith to repair or replace facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance), (ii) as contemplated by the Company’s 2009 capital expenditure budget, which is set forth in cash, stock or propertySection 7.1(h) in respect of any capital stock of the Company Disclosure Letter, or any Company Subsidiary or redeemthe 2010 capital expenditure budget, purchase or otherwise acquire any of to the extent it is substantially similar in all material respects to the 2009 capital stock of expenditure budget and (iii) capital expenditures incurred in connection with integrating the Spinco Assets and the Spinco Business into the Company or and its business, provided that this Section 7.1(h) shall not permit any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions action otherwise prohibited by the foregoing clauses (a) through (sSection 7.1(d).;
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent Except for matters set forth in writing, which consent shall not be unreasonably withheldSchedule 5.01, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the other Transaction Documents, from the date of this Agreement to the Closing Date, Seller shall cause the Company Disclosure Schedule:
(a) The Company shallto, and the Company shall cause each of the Company Subsidiary Subsidiaries to, conduct its business only in the ordinary course Ordinary Course of Business and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall will use all reasonable efforts to preserve intact its present business organization business, keep available the services of its current officers and preserve its regular services to, employees and keep and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings other third parties with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries to the end that the Company’s and the Company Subsidiaries’ goodwill and ongoing business shall be unimpaired at the Closing Date. In addition, and without limiting the generality of the foregoing, except for matters set forth in excess Schedule 5.01 or otherwise expressly permitted by this Agreement, from the date of $200,000 for this Agreement to the Closing Date, Seller covenants and agrees that it shall not permit the Company or any Company Subsidiary to do or permit or cause to occur any of the changes or events set forth in Sections 3.08 and 3.10 or any of the following without the prior written consent of Buyer:
(a) issue, deliver, sell or grant (i) any shares of its Stock, (ii) any Voting Company Debt or other voting securities, (iii) any securities convertible into or exchangeable for, or any options, warrants to purchase or rights to subscribe for, any such indebtedness having a maturity of 90 days shares, voting securities or less convertible or $200,000 for any such indebtedness having a maturity of more than 90 daysexchangeable securities, (iv) agree to any merger“phantom” stock, consolidation“phantom” stock rights, demutualization, acquisition, redomestication, sale of all stock appreciation rights or a substantial portion of its Assets, bulk stock-based performance units or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into an agreement to do any material partnershipof the foregoing;
(b) (i) grant to any employee, joint venture officer or profit sharing contractdirector of the Company or any Company Subsidiary any increase in compensation, including, without limitation, bonus opportunity, except to the extent required under employment agreements in effect as of the date hereof or applicable Law other than contracts with insurance agents in the ordinary course Ordinary Course of business consistent with past practicesBusiness, (viii) grant to any employee, officer or director of the Company or any Company Subsidiary any increase in severance or termination pay, except to the extent required under any agreement in effect as of the date hereof or applicable Law, (iii) enter into any contract limiting employment, consulting, indemnification, severance or termination agreement with any such employee, officer or director, (iv) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Company Benefit Plan or (v) take any action to accelerate any rights or benefits, or make any determinations not in the ability Ordinary Course of Business, under any collective bargaining agreement or Company Benefit Plan, except for the acceleration of payments from the Company or of any Company Subsidiary to engage non-qualified deferred compensation plans listed in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesSchedule 3.11;
(ec) The Company shall notexcept for intercompany indebtedness described in Section 5.04 hereof (such indebtedness, nor shall it permit collectively, the “Permitted Indebtedness”), all of which (other than Indebtedness related to Company’s Mexican joint venture) will be repaid on or before the Closing Date, (i) incur any Company Subsidiary toIndebtedness for borrowed money, issue or sell any shares of debt securities or interests in, warrants or other rights of any kind to acquire any shares debt securities of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary, 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, except for short-term borrowings incurred in the Ordinary Course of Business, or (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to a Company Subsidiary;
(fd) Except make any material Tax election or settle or compromise any material Tax liability or refund;
(xe) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt pay, discharge or implementsatisfy any claims, liabilities or commit to adopt obligations (absolute, accrued, asserted or implementunasserted, contingent or materially amendotherwise), any collective bargainingother than the payment, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement discharge or other employee benefit contract, plan satisfaction of liabilities or policyobligations in the Ordinary Course of Business, (ii) enter into cancel any material Indebtedness (individually or materially amend in the aggregate) or waive any severance contract, claims or rights or (iii) increase in any manner waive the compensation benefits of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay modify in any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject tomanner, any labor organization confidentiality, standstill or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts similar agreement to which the Company or any Company Subsidiary is a party;
(hf) Other than to amend or propose to so amend the Company Charter or Company By-laws or the organizational documents of the Company Subsidiaries;
(g) acquire (x) by merging or consolidating with, or by purchasing assets of, or by any other manner, any Person or division, or business of or equity interest in any Person or (y) any assets that, (A) in the ordinary course of business consistent with past practiceaggregate, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with have a value purchase price in excess of $100,000 200,000, or (B) would constitute a transaction with any other rights which are material to any contract of its Affiliates, except for purchases of inventory, components or make any payment, direct or indirect, supplies in the Ordinary Course of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereofBusiness;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (ih) sell, lease, mortgage, encumber or otherwise grant any interest in dispose of, or agree to sell, lease or otherwise dispose of of, any of its Assets which, individually or assets (including Stock of the Company Subsidiaries) that (i) in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as aggregate have a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating purchase price in excess of $200,000 or (ii) restructurewould constitute a transaction with any of its Affiliates except for sales of inventory, amend, modify components or otherwise affect any Investment Asset or any contract relating thereto which is material to supplies in the financial condition Ordinary Course of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses Business;
(i) and (ii)renew or enter into any non-compete, only in accordance with exclusivity or similar agreement that would restrict or limit the statement operations of investment policy set forth in the Company Disclosure Schedule; and or any of the Company shall furnish to Parent a monthly reportSubsidiaries, in detail reasonably acceptable to Parentor, after the Closing, of all such transactions Buyer or other changes its Subsidiaries;
(other than changes j) settle or compromise any material litigation, or waive, release or assign any material claims;
(k) engage in market values any forward selling or ordinary course changes such as interest paymentsacceleration of customer orders or contracts, maturitiesany deferral in paying payables, etc.) affecting Investment Assets any deferral in making capital expenditures that are necessary to maintain the fixed assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value Ordinary Course of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company Business or any Company Subsidiary of $200,000 or more;
(l) Other than delay in capital projects that are necessary to maintain the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf assets of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation Ordinary Course of its federal income Tax Return for Business, any grant of any discount to customers or any other change in the taxable year ending December 31terms of conditions of sale or purchase (including, 1999without limitation, except as may be required by Applicable Law;
(spayment and delivery terms) Other other than in the ordinary course Ordinary Course of business Business or any other changes intended to increase the current income and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock cash collection of the Company or any Company Subsidiary prior to the Closing Date by accelerating revenue that would otherwise be collected after the Closing Date or redeem, purchase or deferring payment that would otherwise acquire any of be expected to be made prior to the capital stock of the Company or any Company Subsidiary; andClosing Date;
(tl) Neither the Company nor fail to maintain insurance coverage at presently existing levels so long as such insurance is available at commercially reasonable rates;
(m) authorize any Company Subsidiary shall agreeof, in writing or otherwise, commit or agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. Pending the Closing. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to between the date of this Agreement and including the Effective Time, except as set forth in Section 5.1 of the Company Disclosure Schedule or as permitted or required by any other provision of this Agreement, unless Parent shall otherwise consent agree in writing, writing (which consent agreement shall not be unreasonably withheld, delayed or as otherwise expressly permitted or contemplated by this Agreement or as set forth on conditioned), the Company Disclosure Schedule:
(a) The Company shallwill, and shall will cause each Company Subsidiary and direct CPS to, (i) conduct its business operations only in the ordinary and usual course of business and comply in substantially all material respects with all applicable Laws and the same manner as heretofore conducted since December 31requirements of all Company Permits, 1999(ii) make all appropriate voluntary disclosures to Governmental Entities in respect of any violation of Law that could reasonably be expected to result in a Company Material Adverse Effect, and the Company and each Company Subsidiary shall (iii) use all commercially reasonable efforts to preserve intact its present business organization (A) maintain and preserve its regular services tobusiness organization, assets, intangibles and maintain properties and preserve the goodwill of its business relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokers, suppliers and all others having substantial business dealings with it;
, (bB) Except retain the services of its current officers and key employees, and (C) keep in full force and effect all insurance policies, other than in each case such changes made in the ordinary course of business consistent with past practice. Without limiting the foregoing, and as contemplated an extension thereof, except as set forth in Section 5.1 of the Company Disclosure Schedule or as permitted or required by any other provision of this Agreement, the Company shall notnot (unless required by applicable Law), and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwritingand direct CPS not to, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; between the date of this Agreement and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding Effective Time, directly or indirectly, do, or agree to do, any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company following without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned):
(a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, or encumbrance of, any shares of capital stock of, or other Equity Interests in, the Company, any Company Subsidiary and transactions involving derivative securities)or CPS of any class, whether involving a purchase or salesecurities convertible into, that it or exchangeable or exercisable for, any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods shares of such capital stock or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesother Equity Interests, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement warrants or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of such capital stock or interests inother Equity Interests or such convertible or exchangeable securities, or any other ownership interest (including, without limitation, any such interest represented by Contract right), of the Company, any Company Subsidiary or CPS, other than (i) the issuance of Common Shares upon the conversion of Company Preferred Stock or the exercise of Company Options or Company Warrants outstanding as of the date hereof in accordance with their terms and (ii) the issuance of Company Options and Restricted Stock in amounts consistent with past practice to receive any payment based on newly hired or promoted employees, newly engaged consultants or consultants whose responsibilities have been materially expanded; provided, that in the value ofcase of clause (ii), the capital stock of or other equity interests in or any securities convertible into total shares of any capital stock Company Common Stock issued or to be issued pursuant to such Company Options or Restricted Stock awards does not exceed 10,000 shares of or other equity interests Company Common Stock in the Company or any Company Subsidiaryaggregate;
(fc) Except sell, pledge, dispose of, exit, transfer, lease, license, guarantee or encumber, or authorize the sale, pledge, disposition, exit, transfer, lease, license, guarantee or encumbrance of, any material property or assets (xincluding Intellectual Property Rights and real property) as set forth in of the Company, any Company Disclosure ScheduleSubsidiary or CPS, (y) except pursuant to existing contracts or commitments or the sale or purchase of goods or services in the ordinary course of business consistent with past practice, or (z) as required by enter into any commitment or transaction outside the terms ordinary course of agreements or plans already in effect or Applicable Law, business consistent with past practice other than transactions between a wholly-owned Company Subsidiary and the Company shall notor another wholly-owned Company Subsidiary;
(d) declare, and shall not permit set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock (other than dividends paid by a wholly-owned Company Subsidiary to (ithe Company or another wholly-owned Company Subsidiary) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating agreement with respect to the borrowing voting or registration of money byits capital stock;
(e) reclassify, its directorscombine, officers split, subdivide or other employees, except pursuant to amend the terms of agreements of, or plans as currently in effect provided that in no event shall redeem, purchase or otherwise acquire, directly or indirectly, any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employeescapital stock, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization Equity Interests or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employeessecurities;
(f) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any Person or any division thereof or any assets (vii) including real property), other than obligations acquisitions of inventory or assets in the ordinary course of business for consideration that arise by operation is individually not in excess of law or under the by-laws of a party as they exist on the date of this Agreement$750,000, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents in the aggregate not in excess of such party or any of its Subsidiaries or any other Person$3,000,000;
(g) Other incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations of any Person (other than a wholly-owned Company Subsidiary) for borrowed money, except (i) in connection with refinancings of existing indebtedness at the maturity thereof, or (ii) for borrowings under the Company’s existing credit facilities;
(h) make any material loans, advances (other than routine advances to employees of the Company, CPS or the Company Subsidiaries in the ordinary course of business consistent with past practice) or capital contributions to, or investments in (by property transfers, purchase of securities or otherwise), any Person, other than a Company Subsidiary;
(i) except as required by the Company shall not, and shall not permit terms of any Company Subsidiary toBenefit Plan or other Contract in effect on the date hereof, (A) increase the compensation or benefits payable to its employees (other than officers), except for increases in salaries or wages in the ordinary course of business consistent with past practices; (B) increase the compensation or benefits payable to its directors or officers; (C) grant any severance or termination pay, except as otherwise required by Law; or (D) adopt, enter into, establish, amend, modify or terminate any awards under any material bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, profit-sharing, health or welfare, stock option or other equity (or equity-based) pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan (including any plan that would constitute a Company Benefit Plan), policy, agreement, trust, fund or arrangement with, for or in respect of, any shareholder, director, officer, other employee, consultant or Affiliate, except to reflect changes in Law and plan administration;
(j) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity;
(A) except as required by Law or the Treasury Regulations promulgated under the Code, make any capital expenditures change (or expenditures file any such change) in any method of Tax accounting for a material amount of Taxes, or commitments (B) make or change any material tax election or settle or compromise any material liability for expenditures for Taxes, file any amended Tax Return involving a material amount of additional Taxes (except as required by Law), or waive or extend the purchase or lease statute of any products or services or group limitations in respect of products or services Taxes (other than pursuant to extensions of time to file Tax Returns), other than, in each case, in the ordinary course of business and consistent with respect past practice;
(l) initiate, compromise or settle any litigation, proceeding or investigation that is material to Investment Assetsthe Company, CPS or the Company Subsidiaries taken as a whole (other than in connection with the enforcement of the Company’s rights under this Agreement), other than settlements or compromises of litigation (A) which in one or a series of related transactions where the amount paid does not exceed $100,000 500,000 and (B) that do not involve equitable relief or which admission of wrongdoing or misconduct;
(m) pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in the ordinary course of business of liabilities, claims or obligations reflected or reserved against on the Company Financial Statements (or in the notes thereto) or incurred since the June 30, 2010 in the ordinary course of business consistent with past practice or in connection with the transactions contemplated hereby;
(n) enter into any Company Material Contract or any Company Permit, or terminate or amend any Company Material Contract or Company Permit (other than amendments entered into in the ordinary course of business consistent with past practice), or (ii) except as permitted by Section 5.4, release any Person from, or modify or waive any provision of, any confidentiality, standstill or similar agreement;
(o) make any capital expenditures, other than (i) capital expenditures covered by capital expenditure budgets previously delivered to Parent and (ii) capital expenditures not in excess of $750,000 in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or during any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cashthree-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effectmonth period;
(p) The Company shall deliver take any action that is intended or would reasonably be expected to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf result in any of the Company conditions to the Offer set forth in Annex I or any Company Subsidiary after the date hereof;conditions to the Merger set forth in Article 6 not being satisfied; or
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling authorize or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase Contract or otherwise acquire make any commitment to do any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Samples: Merger Agreement
Conduct of Business by the Company. The Company covenants (a) From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) as may be agreed in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise expressly permitted may be contemplated or contemplated required by this Agreement or (iv) as set forth on in Section 5.1(a) of the Company Disclosure Schedule:
(a) The , the Company shallcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted, and that such entities shall cause each Company Subsidiary to, conduct its business only not take any action except in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary shall use all their commercially reasonable efforts to preserve intact its their present business organization lines of business, maintain their rights and franchises and preserve their relationships with customers and suppliers. The Company shall (i) promptly notify Parent of any material change in its regular services tocondition (financial or otherwise) or business or any termination, cancellation, repudiation or material breach of any Company Material Contract (or communications indicating that the same may be contemplated), and maintain its relationships with(ii) give prompt notice to Parent of any change, policyholdersoccurrence, insurerseffect, reinsurerscondition, agentsfact, sales event, or circumstance known to the Company that is reasonably likely, individually or taken together with all other changes, occurrences, effects, conditions, facts, events and distribution organizationscircumstances known to such party, underwritersto result in a Company Material Adverse Effect; provided, investment customershowever, brokers, suppliers and all others having business dealings that no unintentional failure by the Company to provide a required notice under the last sentence of this Section 5.1(a) with it;respect to any matter that would not result in a failure of the conditions set forth in Section 6.3(a) shall result in a failure of the condition set forth in Section 6.3(b).
(b) Except The Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the Company:
(i) except in the ordinary course of business or as disclosed in Section 5.1(b)(i) of the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries that is not wholly owned by the Company or Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except (A) dividends or distributions by any Subsidiaries only to the Company or to any Subsidiary of the Company in the ordinary course of business, (B) dividends or distributions required under the applicable organizational documents of such entity in effect on the date of this Agreement, or (C) regular quarterly cash dividends with customary record and payment dates on the shares of the Company Common Stock not in excess of $0.15 per share per quarter;
(ii) except as otherwise permitted by this Agreement, shall not, and shall not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, or enter into a letter of intent or agreement in principle with respect thereto, other than the Merger and other than any mergers, consolidations, restructurings or reorganizations solely among the Company and its Subsidiaries or among the Company’s Subsidiaries;
(iii) except as otherwise permitted by this Agreement or for transactions between the Company and its Subsidiaries or among the Company’s Subsidiaries, shall not, and shall not permit any of its Subsidiaries, to prepay, redeem, repurchase, defease, cancel or otherwise acquire any Indebtedness or guarantees thereof of the Company or any Subsidiary, other than (A) at stated maturity, (B) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to which holders of such Indebtedness or guarantees thereof may be entitled) and (C) Indebtedness or guarantees thereof disclosed in Section 5.1(b)(iii) of the Company Disclosure Schedule, in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof;
(iv) shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make any loans, advances or capital contributions to, or investments in, any other person with a value in excess of $50.0 million in the aggregate, except (A) as contemplated by this Agreementthe Company’s fiscal 2011 budget and capital expenditure plan, as attached to Section 5.1(b)(iv) of the Company Disclosure Schedule (the “Company 2011 Budget”) (whether or not such acquisition, loan, advance, capital contribution or investment is made during the 2011 fiscal year), (B) as required by contracts disclosed in Section 5.1(b)(iv) of the Company Disclosure Schedule or (C) as made in connection with any transaction solely between the Company and a wholly-owned Subsidiary of the Company or between wholly-owned Subsidiaries of the Company; provided, however, that notwithstanding the foregoing, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make any acquisition of any other person or business or make any loans, advances or capital contributions to, or investments in, any other person which would reasonably be expected to prevent, impede or delay the consummation of the Merger by the End Date;
(v) except as disclosed in Section 5.1(b)(v) of the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries to, authorize any capital expenditures in excess of $50.0 million in the aggregate, except for (A) expenditures contemplated by the Company 2011 Budget (whether or not such capital expenditure is made during the 2011 fiscal year), (B) expenditures contemplated by the Company’s fiscal 2012 budget and capital expenditures plan, which shall not be greater than the expenditures contemplated by the Company 2011 Budget plus 10%, excluding extraordinary items contained in the Company 2011 Budget, or (C) expenditures made in response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or otherwise;
(vi) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose to make the issuance of any change other securities in its dividend practices or policies respect of, in lieu of or in substitution for shares of its underwritingcapital stock, pricing, claims, risk retention, investment, reinsurance practices or policies in except for any material respect; and such transaction by a wholly owned Subsidiary of the Company agrees that it will notify Parent which remains a wholly owned Subsidiary after consummation of such transaction;
(vii) except as disclosed in Section 5.1(b)(vii) of the Company Disclosure Schedule or as required by applicable Law or any Company Benefit Plan as in effect as of the date of this Agreement, shall not, and provide Parent with information in reasonable detail regarding shall not permit any material transactions of its Subsidiaries to, (excluding investment transactions A) increase the compensation or other benefits payable or provided to the Company’s directors, officers, employees or other service providers, other than customary increases in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets practice that do not apply to directors or officers of the Company or service providers who are affiliated with any director or officer of the Company, provided that there shall be no limitation upon any compensation award or payment made to employees (other than any officer or director of the Company) in accordance with and within the parameters of the Company’s current compensation plans at the instruction of the Compensation Committee of the Board of Directors of the Company Subsidiary if deemed necessary or appropriate in the judgment of the Compensation Committee for the appropriate compensation and transactions involving derivative securities), whether involving a purchase or sale, that it or any retention of key employees of the Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change after consultation with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted an outside compensation consultant retained by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary tothe Compensation Committee, (iB) enter into or amend its charter any employment, change of control, severance or byretention agreement with any director, officer or employee of the Company except (1) for agreements entered into with any newly-laws hired employees who are not officers or (unless contemplated hereby)2) for severance agreements entered into with employees who are not officers in connection with terminations of employment, (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than each case, in the ordinary course of business consistent with past practice, (iiiC) incur establish, adopt, enter into, terminate or amend any indebtedness for money borrowed in the aggregate plan, policy, program or arrangement for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or benefit of any Company Subsidiary to engage in any businesscurrent or former directors, to compete with any Person, to do business with any Person officers or in any location employees or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)their beneficiaries, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except except (x) as set forth in the Company Disclosure Schedulepermitted pursuant to clause (B) above, (y) in the ordinary course of business consistent with past practice, practice as would not result in a material increase in cost to the Company and as would not apply to directors or officers of the Company or (z) as required by permitted pursuant to Section 5.1(b)(xi) with respect to any equity based plan, policy, program or arrangement (or award under any of the terms foregoing), (D) enter into, terminate or amend any collective bargaining agreements, or (E) make any change in the key management structure of agreements or plans already in effect or Applicable Law, the Company or any of its material Subsidiaries, including the hiring of additional officers or the termination of existing officers;
(viii) shall not, and shall not permit any Company Subsidiary to (i) adopt or implementof its Subsidiaries to, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend make any severance contract, (iii) increase in any manner the compensation of, loans or enter into any contract relating advances to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries officers, directors, employees, agents or any consultants (other Person;
than loans or advances (gA) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).or
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and From the date hereof until the Closing Date, the Company Subsidiaries thatwill, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or except as otherwise expressly permitted or contemplated required by this Agreement or and except as set forth on the Company Disclosure Scheduleotherwise consented to in advance in writing by Nokia:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only operate the Business in the ordinary course on a basis consistent with past practice and in substantially the same manner as heretofore conducted since December 31not enter into any agreement, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make transaction or propose to activity or make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and commitment with respect to the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions Business except those in the ordinary course of business consistent with past practice, but including transactions involving and not otherwise prohibited under this Section 6.1;
(b) use commercially reasonable efforts to preserve intact the securitization of Assets goodwill of the Business, keep the Business Employees available to Nokia and preserve the relationships and goodwill relating to the Business with customers, distributors, employees and others having business relations with the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringrelated to the Business;
(c) The Company shall not make duly and timely file or cause to be filed all reports and returns relating to the Business required to be filed with any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPGovernmental Entity;
(d) The not dispose of or permit to lapse any rights to the use of any patent, trademark, trade name, service xxxx, license or copyright of the Company shall not, and shall relating to the Business;
(e) not permit any Company Subsidiary to, (i) amend its charter sell or by-laws (unless contemplated hereby)transfer any assets related to or used or held for use with the Business, other than in the ordinary course of business, (ii) grant, create, incur or suffer to exist any Liens on the Transferred Assets, (iii) incur any individual Liability liability or series of related Liabilities in excess of $200,000 other than obligation relating to the Transferred Assets (absolute, accrued or contingent) except in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree waive any claims or rights relating to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its the Transferred Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture contract or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating agreement related to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company SubsidiaryBusiness;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the base compensation of, or enter into any contract relating to the borrowing of money bynew bonus or incentive agreement or arrangement with, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, Business Employee;
(ivg) increase by more than 5% the aggregate number of its employees, (v) not pay or agree to pay any pension, retirement allowance additional or other employee benefit not required by the current terms of increased benefits under any existing plan, agreement or arrangement Company Benefit Plan to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partyBusiness Employee;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit award any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material additional equity to any contract or make any payment, direct or indirect, Business Employee (except to the extent Company is contractually obligated to provide such equity award as of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereofdate hereof);
(i) The Company shall not, and shall not permit amend or terminate any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent employment agreement or enter into any new employment agreement with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportBusiness Employee;
(j) The Company agrees that it shall notperform in all material respects all of its obligations under all Transferred Agreements, nor shall it permit and not default or suffer to exist any Company Subsidiary to, other than pursuant to the operation event or condition which with notice or lapse of separate accounts involved time or both would constitute a default under any Transferred Agreement (except those being contested in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgmentgood faith) and not enter into, assume or amend any contract or commitment that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually is or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or morewould be a Transferred Agreement;
(k) Other than maintain in full force and effect and in the ordinary course same amounts policies of business consistent with past practice, the Company shall not, insurance comparable in amount and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision scope of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant coverage to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed that now maintained by or on behalf of the Company or any Company Subsidiary after and related to the date hereofBusiness;
(ql) The Company shall notnot take any action that would, nor shall the Company permit any Company Subsidiary or that could reasonably be expected to, take result in any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business representations and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock warranties of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiaryset forth in this Agreement becoming untrue; and
(tm) Neither the Company nor any Company Subsidiary shall agreenot authorize, in writing or otherwisecommit or agree to take, to take any of the foregoing actions prohibited by which the foregoing clauses (a) through (s)Company is required not to take without Nokia’s prior written consent, which consent will not be unreasonably withheld or delayed.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself that, between the date hereof and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheldTermination Date, or if later, the Final Funding Date, if any, except as otherwise expressly required or permitted or contemplated by this Agreement or the other Transaction Documents or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only disclosed in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this AgreementPPM, the Company shall not, and shall not permit conduct any Company Subsidiary to, make business or propose to make take any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 action other than in the ordinary course of its business consistent with past practice, (iii) incur any indebtedness for money borrowed as described in the aggregate for PPM) or in connection with the Company maintenance and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion preservation of its Assetscorporate existence or the compliance with applicable laws (including federal and state securities laws) unless a Majority of the Purchasers shall otherwise agree by written consent or by telephonic conference call. By way of amplification and not limitation, bulk except as expressly required or assumption reinsurance arrangement permitted by this Agreement or the other similar reorganizationTransaction Documents, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents disclosed in the ordinary course of business consistent with past practicesPPM, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit between the date hereof and the Termination Date, or if later, the Final Funding Date, if any, directly or indirectly do, or propose to do, any Company Subsidiary toof the following without the prior written consent of a Majority of the Purchasers:
(i) amend or otherwise change the Certificate of Incorporation or By-laws or alter through merger, issue liquidation, reorganization, restructuring or sell in any other fashion the corporate structure or ownership of the Company;
(ii) issue, sell, transfer, pledge, dispose of or encumber, or authorize the issuance, sale, transfer, pledge, disposition or encumbrance of, any shares of or interests incapital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of or interests incapital stock, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative ownership interest of one the Company; or more bargaining units comprising a material number sell, transfer, pledge, dispose of employeesor encumber, or (vii) authorize the sale, transfer, pledge, disposition or encumbrance of any assets of the Company other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice(as described in the PPM) or redeem, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of otherwise acquire, directly or indirectly, any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which capital stock of the Company or any Company Subsidiary is a partyCompany;
(hiii) Other declare, set aside or pay any dividend or other distribution (whether in cash, stock or other securities or property or any combination thereof) in respect of any of its capital stock or other equity interests, split, combine or reclassify any of its capital stock or other securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or amend the terms of, repurchase, redeem or otherwise acquire any of its securities, or propose to do any of the foregoing;
(iv) sell, transfer, lease, license, sublicense, mortgage, pledge, dispose of, encumber, grant or otherwise dispose of any material properties or assets other than in the ordinary course of business consistent (as described in the PPM), or amend or modify in any way any existing agreements with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material respect to any contract material properties or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, assets other than pursuant to the operation of separate accounts in the ordinary course of business;
(v) purchase, consistent with existing strategiesacquire (by merger, (i) sellconsolidation, acquisition of stock or other securities or assets or otherwise), lease, mortgagelicense, encumber sublicense or otherwise grant obtain any interest in any properties or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or assets other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business and consistent with past practice; 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 Company shall notobligations of any Person, and shall not permit or make any Company Subsidiary toloans, advances or enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than financial commitments, in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (each case other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(ovi) The Company shallchange any accounting policies or procedures (including procedures with respect to reserves, revenue recognition, payments of accounts payable and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage collection of all types in effect accounts receivable) unless required by statutory accounting principles or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse EffectGAAP;
(pvii) The Company shall deliver create, incur, suffer to Parent as promptly as practicable after the filing thereof with applicable regulatory authoritiesexist or assume any liability or obligation (absolute, unaudited accrued, contingent or audited, as the case may be, SAP Statements filed by or on behalf of the Company otherwise) or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change lien on any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other material assets other than in the ordinary course of business and consistent with past practice;
(viii) engage in any transaction, neither or enter into any agreement, arrangement, or understanding with, directly or indirectly, any related party, other than those existing as of the Company nor date hereof;
(ix) fail to maintain in full force and effect all self-insurance and insurance, as the case may be, currently in effect;
(x) hire or terminate any Company Subsidiary shall declaresenior level or key employee or consultant; increase the compensation (including, set aside without limitation, bonus) payable or to become payable to its officers or employees, or grant any severance or termination pay or stock options to, or enter into any dividends employment or distributions (whether in cashseverance agreement with any director, officer or other senior level or key employee of the Company, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock or property) in respect other equity option, restricted stock or other restricted security, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any capital stock current or former directors, officers or employees;
(xi) (A) enter into any material agreement, contract or commitment of any kind or nature whatsoever other than in the ordinary course of business (as described in the PPM), or (B) modify, amend or transfer or terminate any material agreement to which the Company is a party or waive, release or assign any Company Subsidiary material rights or redeemclaims thereunder other than in the ordinary course of business (as described in the PPM);
(xii) pay, purchase discharge, satisfy or otherwise acquire settle any litigation or waive, assign or release any rights or claims, or pay, discharge or satisfy any liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) other than in the ordinary course of business (as described in the PPM);
(xiii) issue any press release or make any public announcement which has not been approved by the Placement Agent; or
(xiv) authorize, recommend, propose or announce an intention to do any of the capital stock of the Company foregoing, or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agreeagree or enter into anjy agreement, in writing contract commitment or otherwise, arrangement to take do any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Conduct of Business by the Company. The Except (i) as set forth in Section 4.1(a) of the Company covenants Disclosure Letter, (ii) as required by applicable Law, (iii) as contemplated by this Agreement, (iv) as consented to in writing by Parent (such consent not to be unreasonably withheld, delayed or conditioned), and agrees as to itself (v) for transactions solely between or among the Company and the wholly-owned Company Subsidiaries thatSubsidiaries, at all times up during the period from the date of this Agreement to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each the Company Subsidiary Subsidiaries to, conduct its business only carry on their respective businesses in all material respects in the ordinary course consistent with past practice and in substantially compliance in all material respects with all applicable Laws and, to the same manner as heretofore conducted since December 31extent consistent therewith, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its their current business organizations, keep available the services of their present business organization officers and key employees and preserve its regular services totheir material Intellectual Property Rights, current rights and maintain its goodwill and preserve business relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with significant customers, brokerssuppliers, suppliers distributors and all others other persons having business dealings with it;
them; provided, however, that no action by the Company or any Company Subsidiary with respect to matters specifically permitted by any other provision of this Section 4.1 shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. Without limiting the generality of the foregoing, except (bi) Except as set forth in Section 4.1(a) of the Company Disclosure Letter, (ii) as required by applicable Law, (iii) as contemplated by this Agreement, (iv) as consented to in writing by Parent (such consent not to be unreasonably withheld, delayed or conditioned) and (v) for transactions solely between or among the Company and the wholly-owned Company Subsidiaries, during the period from the date of this Agreement to the Effective Time, the Company shall not, not and shall not permit any Company Subsidiary to, directly or indirectly:
(i) (A) except for regular quarterly cash dividends on the Company Shares consistent with past practices (not to exceed $0.0375 per share) and dividends declared as of the date hereof and not yet paid, declare, set aside, make or propose to pay any dividends on, or make any other distributions in respect of, any of the Company Shares, its capital stock, or any equivalent thereof, (B) adjust, recapitalize, purchase, split, combine or reclassify any of the Company Shares or any of its capital stock or (C) except pursuant to agreements entered into with respect to the Company Share Plans that are in effect as of the close of business on the date of this Agreement and previously disclosed to Parent, directly or indirectly, purchase, redeem or otherwise acquire any Company Shares or any shares of capital stock of the Company Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (which obligation shall not restrict any cashless exercises or similar transactions pursuant to an exercise of any Company Shares Option or other awards issued and outstanding under the Company Share Plans);
(ii) issue or authorize the issuance of, grant, deliver, sell, pledge, amend, dispose of or encumber, any Company Shares, other shares of its capital stock (or any other securities in respect of, in lieu of, or in substitution for, Company Shares or other shares of its capital stock), any other voting securities or any securities convertible into or exchangeable or exercisable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities, including, without limitation, stock appreciation rights, phantom stock or similar instruments, or make any changes (by combination, merger, consolidation, reorganization, liquidation or otherwise) in the capital structure of the Company or any Company Subsidiary, other than (1) the issuance and delivery of Company Shares upon the exercise of Company Shares Options under the Company Share Plans, (2) in connection with Company Share-Based Awards under the Company Share Plans, or (3) the issuance and delivery of Company Shares pursuant to the Company’s 1996 Outside Directors Deferred Stock Plan, in each case of (1), (2) and (3) as are outstanding as of the date of this Agreement and in accordance with their present terms or as contemplated by this Agreement;
(iii) amend its articles of incorporation or code of regulations (or other comparable organizational documents);
(iv) sell, lease, license, transfer, grant, exchange or swap, mortgage or otherwise encumber, or subject to any Lien (other than Permitted Liens) or otherwise dispose of any of its or any Company Subsidiary’s properties or assets, the capital stock of the Company Subsidiaries, with a value in excess of $250,000 individually or $1,000,000 in the aggregate other than sales of products and services in the ordinary course of business consistent with past practice and except (A) pursuant to existing agreements in effect prior to the execution of this Agreement and listed on Section 4.1(a)(iv) of the Company Disclosure Letter, or (B) as may be required by applicable Law;
(v) disclose, other than to representatives of Parent, any material trade secret unless a written non-disclosure agreement is executed by the recipient of such information;
(vi) incur any capital expenditures or enter into any commitments for capital expenditures, capital additions or capital improvements involving more than an aggregate amount of $300,000 per fiscal quarter, except in accordance with the capital expenditure budget and prior fiscal year carryover amounts set forth in Section 4.1(a) of the Company Disclosure Letter, or pay, incur or otherwise make any commitment to pay or incur in excess of $750,000 in the aggregate for any information enterprise resource management systems (including, without limitation, the Company’s planned Oracle update) or take any further action other than as required under an existing contract;
(vii) incur any net increase in Indebtedness from that existing on the date hereof other than (A) up to $1,000,000 in the aggregate of additional Indebtedness, (B) Indebtedness incurred in the ordinary course of business under lines of credit existing on the date of hereof, (C) letters of credit, surety bonds, guarantees of indebtedness for borrowed money and security time deposits in the ordinary course of business consistent with past practice and (D) indebtedness relating to the reborrowing of amounts repaid;
(viii) (A) grant any increase in the compensation or benefits payable or to become payable by the Company or any Company Subsidiary to any current or former director, officer, employee or consultant of the Company or any Company Subsidiary, except to the extent required by the terms of a Plan in effect as of the date of this Agreement, (B) adopt, enter into, amend or otherwise increase, reprice or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under any Plans, (C) enter into or amend any employment, bonus, severance, change in its dividend practices control, retention or any similar agreement or any collective bargaining agreement, or grant any severance, bonus, termination, or retention pay to any officer, director, consultant or employee of the Company or any Company Subsidiary (other than as required by the terms of a Plan in effect as of the date of this Agreement) or terminate any Plan, or (D) pay or award any pension, retirement allowance or other non-equity based incentive awards, or other employee or director benefit or perquisite not required by a Plan in effect as of the date of this Agreement, all except as may otherwise be required to comply with applicable Laws; provided, however, that the Company may terminate, and take any actions required in connection with termination of, the Company’s 1996 Outside Directors Deferred Stock Plan, and, provided, further, however, that the Company shall terminate the Company’s 2005 Employee Stock Purchase and Dividend Company Reinvestment Plan (the “Company ESPP”) and the Company’s Supplemental Executive Retirement Plan (the “Company SERP”) as provided for under Section 5.8(f), and, provided, further, however, that nothing in this clause (viii) shall prohibit the Company or any Company Subsidiary from taking any action relating to the hiring, termination or promotion of employees in the ordinary course of business consistent with past practice or from filling a position included in the capital expenditure budget set forth in Section 4.1(a) of the Company Disclosure Letter;
(ix) materially change any Tax or financial accounting policies or procedures or any of its methods affecting its assets, liabilities or business, in its underwritingeach case, pricingin effect on the date hereof, claimsexcept as required by GAAP or applicable Law;
(A) acquire by merging or consolidating with, risk retentionby purchasing any equity interest in or a portion of the assets of, investmentor by any other manner, reinsurance practices in one transaction or policies in a series of related transactions, any corporation, partnership, association or other business organization or any interest therein, or division or business thereof, or otherwise acquire any material respect; and amount of operating assets of any other person (other than the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions purchase of assets from suppliers or vendors in the ordinary course of business consistent with past practice); (B) merge or consolidate with any other person; or (C) liquidate, but including transactions involving the securitization of Assets of the Company dissolve, restructure, wind-up or of reorganize its business or organize any Company Subsidiary and transactions involving derivative securities), whether involving a purchase new subsidiary or sale, that it or any Company Subsidiary is seriously consideringaffiliate;
(cxi) The Company shall not make except in the ordinary course of business and consistent with past practice or to the extent required by applicable Law, make, change or rescind any material change in accounting methods express or practices, including without limitation any change deemed election with respect to establishment Taxes, settle or compromise any material claim or action relating to Taxes, file or amend any Tax Return or change any of reserves its methods of accounting for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or of reporting income or deductions for Tax purposes in any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPmaterial respect;
(dxii) The Company shall notmake any loans, and shall not permit any Company Subsidiary advances or capital contributions to, or investments in, any other person, except (iA) amend its charter or by-laws (unless contemplated hereby)de minimis advances for employees, (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than contractors and consultants in the ordinary course of business consistent with past practice, (iiiB) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than trade credit issued in the ordinary course of business consistent with past practice, (viiiC) enter into any contract that is reasonably likely to materially investments of excess cash and adversely affect cash equivalents in the consummation ordinary course of business consistent with past practice and (D) as required by existing contracts;
(xiii) except in the transactions contemplated hereby, ordinary course of business consistent with past practice (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract other than with respect to any agreement of the subject type described in clause (ii) of Section 3.1(r)), (A) enter into, modify or amend in any material respect or terminate any Company Material Contract, (B) waive, release, relinquish or assign any Company Material Contract (or any of the foregoing clauses;
(e) The Company shall not, nor shall it permit Company’s or any Company Subsidiary to, issue or sell any shares of or interests in, or Subsidiary’s rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in thereunder) or any securities convertible into shares of right or claim that is material to the Company and the Company Subsidiaries, taken as a whole or (C) cancel or forgive any capital stock of or other equity interests in Indebtedness owed to the Company or any Company Subsidiary;
(fxiv) Except waive, release, assign, initiate, pay, discharge, settle or compromise any pending or threatened claim, action, litigation, arbitration or proceeding other than (x) as set forth in the Company Disclosure Schedule, (yA) in the ordinary course of business consistent with past practice, or (zB) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall solely for money damages not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or $500,000 in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;; or
(kxv) Other than in the ordinary course of business consistent with past practiceauthorize, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract commit or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and Except for matters set forth in Section 6.01(b) of the Company Subsidiaries thatDisclosure Letter, at all times up to and including as otherwise expressly permitted or expressly contemplated by this Agreement, as required by applicable Law or with the Effective Time, unless prior written consent of Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by delayed and shall be deemed given if Parent provides no written response within five Business Days after receipt of a written request from the Company for such consent), from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
(a) The Effective Time, the Company shall, and shall cause each Company Subsidiary to, use commercially reasonable efforts to (i) conduct its business only in the ordinary course consistent with past practice in all material respects and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to (ii) preserve intact its present business organization and preserve maintain its regular services toadvantageous business relationships. In addition, and maintain its relationships withwithout limiting the generality of the foregoing, policyholdersexcept for matters set forth in Section 6.01(b) of the Company Disclosure Letter, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as otherwise expressly permitted or expressly contemplated by this Agreement, as required by applicable Law or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, do any of the following:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or propose property or any combination thereof) in respect of, any of its capital stock, other equity interests or voting securities, other than dividends and distributions by a direct or indirect wholly owned Company Subsidiary to make the Company or any other wholly owned Company Subsidiary, (B) split, combine, subdivide or reclassify any of its capital stock, other equity interests or voting securities, or securities convertible into or exchangeable or exercisable for capital stock or other equity interests or voting securities or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, other equity interests or voting securities or (C) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or exchangeable or exercisable for capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, other than (1) the acquisition by the Company of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price thereof, (2) the withholding of shares of Company Common Stock to satisfy Tax obligations or payment of an exercise price with respect to Company Equity Awards, (3) the acquisition by the Company of shares of Company Common Stock underlying Company Equity Awards in connection with the forfeiture of such awards, (4) transactions pursuant to the Company Warrant Certificate and (5) transactions solely between or among the Company and wholly owned Company Subsidiaries;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Liens, other than Permitted Liens, (A) any shares of capital stock of the Company or any Company Subsidiary (other than the (1) issuance of Company Common Stock upon the exercise of the Company Stock Options and the vesting or delivery of other Company Equity Awards pursuant to the Company Stock Plans, in each case, which are outstanding as of the date hereof and in accordance with their terms as of the date of this Agreement, (2) purchase of Company Common Stock under the Company ESPP in accordance with its terms as of the date of this Agreement (as modified by this Agreement) or (3) issuance of Company Common Stock pursuant to the Company Warrant Certificate), (B) any other equity interests or voting securities of the Company or any Company Subsidiary, (C) any securities convertible into or exchangeable or exercisable for capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary, (D) any warrants, calls, options or other rights to acquire any capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary, (E) any rights issued by the Company or any Company Subsidiary that are linked in any way to the price of any class of Company Capital Stock or any shares of capital stock of any Company Subsidiary, the value of the Company, any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of the Company or any Company Subsidiary or (F) any Company Voting Debt;
(iii) (A) amend the Company Charter or the Company Bylaws or (B) amend in any material respect the charter or organizational documents of any Company Subsidiary, except, in the case of any amendment to the Company Bylaws or organizational documents of any Company Subsidiary, for any amendment that (1) is not material and (2) does not prevent or materially impede, interfere with, hinder or delay the consummation of the Merger or any of the other Transactions;
(iv) except as required pursuant to the terms of any Company Benefit Plan as in effect on the date of this Agreement or adopted, established, entered into or amended after the date of this Agreement in accordance with the terms of this Agreement, (A) adopt, enter into, terminate or amend any Company Benefit Plan; (B) increase in any manner the compensation or benefits of any employee, officer, director or other service provider of the Company or any Company Subsidiary with annual base salary or annualized base wage rate as of the date hereof of $200,000 or more, subject to the limitations set forth in Section 6.01(b)(iv) of the Company Disclosure Letter; (C) grant or agree to grant any change in its dividend practices control, severance, retention or policies similar compensation or in its underwritingbenefits to, pricingor enter into any employment or similar agreement with any employee, claimsofficer, risk retention, investment, reinsurance practices director or policies in any material respect; and other service provider of the Company agrees that it will notify Parent and provide Parent or any Company Subsidiary (except for offer letters entered into in the ordinary course of business consistent with information past practice with new hire employees with annual base salary of less than $200,000); (D) take any action to accelerate the payment of any compensation or benefit under any Company Benefit Plan; or (E) waive any conditions on any equity or equity-based awards under any Company Stock Plan;
(v) (A) terminate the employment of any employee of the Company or any Company Subsidiary with an annual base salary or annualized base wage rate as of the date hereof of $200,000 or more, other than for cause or due to death or disability (in reasonable detail regarding any material transactions (excluding investment transactions each case, as determined by the Company in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets ) or (B) hire any individual with an annual base salary or annualized base wage rate as of the Company date hereof of $200,000 or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringmore;
(cvi) The Company shall not make any material change in financial accounting methods methods, principles or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any except insofar as may have been required by a change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP(after the date of this Agreement);
(dvii) The directly or indirectly acquire or agree to acquire in any transaction any equity interest in or business of any firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity or division thereof or any properties or assets (other than (A) purchases of supplies, inventory, products and services in the ordinary course of business consistent with past practice or (B) transactions solely between or among the Company shall notand wholly owned Company Subsidiaries) if the aggregate amount of the consideration paid or transferred by the Company and the Company Subsidiaries in connection with all such transactions would exceed $1,000,000;
(viii) sell, lease (as lessor), license, mortgage, sell and shall not permit leaseback or otherwise encumber or subject to any Lien, other than a Permitted Lien, or otherwise dispose of any properties or assets (other than (A) sales of supplies, inventories, products or services in the ordinary course of business consistent with past practice or of supplies, inventory, products, properties or other assets that are obsolete, worn out, surplus or no longer used or useful in the conduct of the Company or any Company Subsidiary toor (B) transactions solely between or among the Company and wholly owned Company Subsidiaries) or any interests therein that, (i) amend its charter individually or by-laws (unless contemplated hereby)in the aggregate, (ii) incur any individual Liability or series of related Liabilities have a fair market value in excess of $200,000 1,000,000, except in relation to mortgages, liens and pledges to secure Indebtedness for borrowed money permitted to be incurred under Section 6.01(b)(ix);
(ix) incur any Indebtedness for borrowed money, except for (A) Indebtedness incurred under the Company Credit Agreement in effect as of the date hereof in the ordinary course of business; (B) Indebtedness incurred in connection with the renewal, extension or refinancing of any Indebtedness existing on the date of this Agreement or permitted to be incurred, assumed or otherwise entered into hereunder, provided that the execution, delivery and performance of this Agreement and the consummation of the Transactions shall not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or any loss of a material benefit under, or result in the creation of any Lien, other than a Permitted Lien, under such replacement Indebtedness; (C) letters of credit, bank guarantees, security or performance bonds or similar credit support instruments, overdraft facilities or cash management programs, in each case issued, made or entered into in the ordinary course of business consistent with past practice (provided that such Indebtedness does not exceed $1,000,000 in the aggregate); (D) intercompany Indebtedness (including guarantees) between or among the Company and wholly owned Company Subsidiaries in the ordinary course of business consistent with past practice; or (E) other Indebtedness incurred in the ordinary course of business not to exceed $250,000 in the aggregate;
(x) make, or agree or commit to make, any capital expenditure except for capital expenditures (A) in excess of $1,000,000 above the amounts set forth in the capital expenditure targets provided to Parent prior to the date of this Agreement or such other capital expenditure targets as may be mutually agreed by Parent and the Company or (B) as reasonably required in response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or otherwise;
(xi) enter into or amend any Contract if such Contract or amendment of a Contract would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Transactions;
(xii) enter into, modify, amend, extend, renew, replace or terminate any collective bargaining or other labor union Contract applicable to the employees of the Company or any of the Company Subsidiaries;
(xiii) waive, release, assign, settle or compromise any Action (other than any Action with respect to Taxes, which is governed by subsection (xvi) below), other than waivers, releases, assignments, settlements or compromises that do not create obligations of the Company or any of the Company Subsidiaries other than the payment of monetary damages not in excess of $100,000 in the aggregate;
(xiv) abandon, sell, transfer, dispose of, cancel, knowingly allow to lapse, or fail to renew, maintain or defend, encumber, convey title (in whole or in part) or grant any right or other licenses to material Intellectual Property owned or exclusively licensed to the Company or any Company Subsidiary, or enter into licenses or agreements that impose material restrictions upon the Company or any of its Affiliates with respect to Intellectual Property owned by any third party, in each case other than in the ordinary course of business consistent with past practice;
(xv) materially amend or modify any Company Material Contract or enter into, materially amend or modify any Contract that would be a Company Material Contract if it had been entered into prior to the date of this Agreement (iiiand, for the avoidance of doubt, excluding terminations upon expiration of the term thereof in accordance with the terms thereof);
(xvi) incur change any indebtedness for money borrowed method of Tax accounting, settle any Action relating to Taxes, make any Tax election, file any amended Tax Return, settle or compromise any Tax liability, claim or assessment, enter into any closing agreement, waive or extend any statute of limitations with respect to any Taxes, or surrender any right to claim a refund of Taxes, in the aggregate for each case, that is material to the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having Subsidiaries, taken as a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, whole;
(iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vixvii) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course new line of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any outside of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesexisting business;
(exviii) The Company shall not, nor shall it permit any Company Subsidiary to, issue dissolve or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in liquidate the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (viixix) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (iA) sell, lease, mortgage, encumber materially amend or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, modify any Company SubsidiaryLease or enter into, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or materially amend or waive modify any material provision of any material contract which Contract that would involve the payment by the be such a Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant Lease if it had been entered into prior to a contract in effect on the date of this Agreement; (B) sell, lease (i) as lessor), license, mortgage, sell and leaseback or otherwise encumber or subject to any controlling equity interest in any Person (Lien, other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditPermitted Lien, or otherwise dispose of any Company Real Property; or (ivC) directly or indirectly acquire or agree to acquire any real property that would constitute Company Real Property if it had been acquired or mortgage investments except in agreed to be acquired prior to the ordinary course date of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;this Agreement; or
(nxx) The Company shall not, and shall not permit authorize any Company Subsidiary to, enter into any newof, or materially amend commit, resolve or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (IsoPlexis Corp)
Conduct of Business by the Company. (a) The Company covenants and agrees as to itself that, between the date of this Agreement and the Effective Date, except as required (i) by a Governmental Authority of competent jurisdiction, or (ii) to complete the Transactions as contemplated by this Agreement, or as disclosed in Section 5.01 of the Company Subsidiaries thatDisclosure Schedule, at all times up or as may be required in order for the Company and the Purchaser Parties to and including the Effective Timecomply with applicable Laws, unless Parent shall otherwise consent in writing, which such consent shall not to be unreasonably withheld, withheld or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Scheduledelayed:
(ai) The the Company shall, and the Company Subsidiaries shall cause each Company Subsidiary to, conduct its their business only in the ordinary course of business and in a manner consistent with past practice and Prudent Industry Practice; and
(ii) the Company shall maintain its existence and good standing and use its reasonable commercial efforts to preserve substantially intact the same manner as heretofore conducted since December 31, 1999, business organization of the Company and the Company Subsidiaries, to keep available the services of the current officers, employees and each consultants of the Company Subsidiary shall use all reasonable efforts and the Company Subsidiaries and to preserve intact its present business organization the current relationships of the Company and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment the Company Subsidiaries with customers, brokers, suppliers and all others having other persons with which the Company or any Company Subsidiary has business dealings with it;relations.
(b) Except By way of amplification and not limitation, except as expressly contemplated by any other provision of this Agreement, Agreement or the Company shall notDisclosure Letter or as required by a Governmental Authority of competent jurisdiction or as may be required in order for the Company and the Purchaser Parties to comply with applicable Laws, and shall not permit neither the Company nor any Company Subsidiary toshall, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; between the date of this Agreement and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding Effective Date, directly or indirectly, do any material transactions of the following without the prior written consent of Parent, such consent not to be unreasonably withheld or delayed:
(excluding investment transactions in i) amend or otherwise change its certificate of incorporation or by-laws or equivalent organizational documents;
(ii) issue, sell, pledge, assign, license or sub-license, dispose of, grant, encumber, or authorize the ordinary course issuance, sale, pledge, disposition, grant or encumbrance of, (A) any shares of business consistent with past practice, but including transactions involving the securitization any class of Assets capital stock of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesSubsidiary, or any change in depreciation or amortization policies or rates adopted by itoptions, except as required by Applicable Lawwarrants, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement convertible securities or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests insuch capital stock, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or ownership interest (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited towithout limitation, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (iiphantom interest), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an any Company Subsidiary, except for the issuance of Company Common Shares issuable upon the exercise of Company Stock Options, provided the Company complies with Section 6.09 or (B) any properties or assets of the Company or of any Company Subsidiary including any interest in an amount any of $250,000 the Company Projects; or moresuffer, permit or allow the existence of any Lien on any of the foregoing;
(kiii) Other than except as specifically contemplated and permitted in Section 6.09, accelerate, amend or change the ordinary course exercise period of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary toStock Options or Company Warrants, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or re-price any Company Subsidiary of $200,000 Stock Options or moreCompany Warrants, or authorize cash payments in exchange for any Company Stock Options or Company Warrants;
(liv) Other than declare, set aside, make or pay any dividend or other distribution, payable in the ordinary course cash, stock, property or otherwise, with respect to any of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle its capital stock or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000other securities;
(mv) The Company shall notreclassify, and shall not permit any Company Subsidiary tocombine, split, subdivide or redeem, or purchase or otherwise acquire, except pursuant to a contract in effect on the date directly or indirectly, any of this Agreementits capital stock or other securities;
(vi) (A) acquire (including, (iwithout limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any controlling equity interest of any nature in any Person (whatsoever, including, without limitation, any corporation, partnership, other than Investment Assets), (ii) business organization or any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditdivision thereof, or (iv) any real property or mortgage investments except in the ordinary course material amount of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangementsassets, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice; (B) 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 grant any security interest in any of its assets exceeding $25,000 in the aggregate, except in the ordinary course of business and consistent with past practice; (C) authorize, or make any commitment with respect to, capital expenditures which are, in the aggregate, in excess of Cdn.$50,000 and not included in the Company’s 2009/2010 budget, a current copy of which has been provided to the Parent, from the date hereof until the earlier of (x) the Effective Time or (z) the termination of this Agreement pursuant to Article VIII; or (D) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(b)(vi);
(ovii) The hire or terminate any employee or service provider except as expressly provided in Section 5.01(b)(vii) of the Company shallDisclosure Schedule;
(viii) increase the compensation payable or to become payable or the benefits provided to its directors, and shall cause each Company Subsidiary toofficers, maintain uninterrupted its existing insurance coverage of all types in effect consultants, service providers or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is availableemployees, except for insurance coverage general increases in the failure ordinary course and consistent with past practice and except as provided in written agreements between the Company or the Company Subsidiaries with such persons, or grant any severance or termination pay to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authoritiesor enter into any employment or severance agreement with, unaudited any director, officer, consultant, service provider or audited, as the case may be, SAP Statements filed by or on behalf other employee of the Company or of any Company Subsidiary after Subsidiary, or establish, adopt, enter into or amend any 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 date hereofbenefit of any director, officer, consultant, service provider or employee;
(qix) The Company shall not, nor shall the Company permit change any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger accounting principles used by it, other than as a reorganization under Section 368 of the Coderequired by GAAP;
(rA) Neither the Company nor any Company Subsidiary shall (i) make make, change or rescind any material express Tax election, settle or deemed election relating to compromise any Liability for Taxes, (ii) make a request for a tax ruling change or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change revoke any of its methods of reporting income Tax accounting or deductions annual Tax accounting periods, file any amended Tax Return, surrender any claim for federal income tax purposes from those employed a refund of Taxes, enter into any closing agreement with a taxing authority relating to any Tax, or waive or extend the statute of limitations in respect of any Tax (other than pursuant to extensions of time to file Tax Returns in the ordinary course of business), or (B) take any action with respect to the computation of Taxes or the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable LawReturns that is inconsistent with past practice;
(sxi) Other pay, discharge or satisfy any claim, Liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the ordinary course of business and consistent with past practice, neither except for Liabilities for fees and other costs arising in connection with the Company nor any Company Subsidiary shall declarecompletion of the Transactions;
(xii) (A) amend, set aside modify or pay any dividends or distributions (whether in cash, stock or property) in respect consent to the termination of any capital stock Material Contract, or amend, waive, modify or consent to the termination of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company Company’s or any Company Subsidiary; and’s rights thereunder or (B) enter into any contract or agreement that would be a Restrictive Agreement or a Related Party Agreement;
(txiii) Neither the Company nor amend, vary, suspend or terminate any rights under any Contracts for any Company Subsidiary shall agreeProjects including requesting any Advanced XXXXX FIT Amendment (as such term is defined in the FIT Rules);
(xiv) commence or settle any Action; or
(xv) except as permitted by Section 6.02, in writing announce an intention, enter into any formal or otherwise, informal agreement or otherwise make a commitment to take do any of the actions prohibited by foregoing or take any action that would materially delay the foregoing clauses (a) through (s)consummation of the Arrangement. For greater certainty, and notwithstanding the foregoing, the Company may incur Indebtedness in the ordinary course of business and consistent with past practice, without the prior written consent of Parent.
Appears in 1 contract
Samples: Arrangement Agreement (Quantum Fuel Systems Technologies Worldwide Inc)
Conduct of Business by the Company. The Company covenants and agrees as Pending the Merger. Prior to itself and the Closing Date, unless the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing or as otherwise expressly permitted contemplated by this Agreement:
(a) the business of VWI shall be conducted only in the ordinary course;
(b) VWI shall not (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its Articles of Incorporation or Bylaws except to effectuate the transactions contemplated by this Agreement or as (iii) split, combine or reclassify the outstanding VWI capital stock or declare, set forth on the Company Disclosure Schedule:
(a) The Company shallaside or pay any dividend payable in cash, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make stock or propose to property or make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in distribution with respect to any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringsuch stock;
(c) The Company VWI shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter issue or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to issue any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)additional VWI Common Stock, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall notoptions, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, warrants or rights of any kind to acquire any shares of VWI capital stock; (ii) acquire or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares dispose of any capital stock fixed assets or acquire or dispose of or any other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) substantial assets other than in the ordinary course of business consistent with past practice, or business; (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (iiiii) enter into or materially amend any severance contract, (iii) increase in agreement, commitment or arrangement with respect to any manner of the compensation of, foregoing or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or except as contemplated by this Agreement, enter intointo any contract, adopt agreement, commitment or increase any indemnification arrangement to dissolve, merge, consolidate or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or enter into any other Personmaterial business combination;
(gd) Other than in VWI shall use its commercially reasonable efforts to preserve intact the ordinary course business organization of VWI, to keep available the service of its present officers and key employees, and to preserve the good will of those having business consistent relationships with past practice, the Company shall it; and
(e) VWI will not, and shall not nor will it authorize any director or authorize or permit any Company Subsidiary officer or employee or any attorney, accountant or other representative retained by it to make, solicit, encourage any inquiries with respect to, make or engage in any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited tonegotiations concerning, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens Acquisition Proposal (as defined belowbelow for purposes of this paragraph). VWI will promptly advise the Company orally and in writing of any such inquiries or proposals (or requests for information) and Liens not individually the substance thereof. As used in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructurethis paragraph, amend, modify or otherwise affect “Acquisition Proposal” shall mean any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as proposal for a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions merger or other changes (other than changes in market values business combination involving VWI or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess acquisition of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling substantial equity interest in it or any material assets of it other than as contemplated by this Agreement. VWI will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise conducted heretofore with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Samples: Share Exchange and Reorganization Agreement (Concrete Leveling Systems Inc)
Conduct of Business by the Company. The Company covenants and agrees Except as to itself and set forth in Section 4.1(a) of the Company Subsidiaries thatDisclosure Letter, at all times up as otherwise expressly contemplated by this Agreement, as required by Law or as consented to and including the Effective Time, unless by Parent shall otherwise in writing (such consent in writing, which consent shall not to be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by delayed), during the period from the date of this Agreement or as set forth on to the First Effective Time, the Company Disclosure Schedule:
(a) The Company shallwill, and shall will cause each Company Subsidiary its Subsidiaries to, conduct its business only carry on their respective businesses in the ordinary course and in substantially consistent with past practice and, to the same manner as heretofore conducted since December 31extent consistent therewith, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its present their current business organization organizations, preserve their assets and properties in good repair and condition, use commercially reasonable efforts to keep available the services of their current officers and other key employees and preserve its regular services to, and maintain its their relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others with those Persons having business dealings with it;
(b) them; provided, however, that no action by the Company or any of its Subsidiaries with respect to matters specifically addressed by the following sentence will be deemed to be a breach of this sentence unless such action would constitute a breach of the following sentence. Except as set forth in Section 4.1(a) of the Company Disclosure Letter, as otherwise expressly contemplated by this Agreement, as required by Law or as consented to by Parent in writing (such consent not to be unreasonably withheld, conditioned or delayed with respect to matters specifically addressed in Section 4.1(a)(iii), (iv), (v), (vi), (vii), (ix), (x), (xii), (xiii) (xvi), and, to the extent related to the foregoing, (xvii)), during the period from the date of this Agreement to the First Effective Time, the Company shall will not, and shall will not permit any of its Subsidiaries to:
(i) (A) other than dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company Subsidiary toto its direct or indirect parent, declare, set aside or pay any dividends on, make any other distributions in respect of, or propose enter into any Contract with respect to make the voting of, any change of its capital stock, (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in its dividend practices or policies respect of, in lieu of or in substitution for shares of its underwritingcapital stock, pricingor (C) purchase, claims, risk retention, investment, reinsurance practices redeem or policies in otherwise acquire any material respect; and shares of capital stock of the Company agrees that it will notify Parent and provide Parent or any of its Subsidiaries or any other securities thereof or any rights, warrants, options or stock appreciation rights to acquire any such shares or other securities (other than the acquisition of shares from a holder of a Company Equity Award in satisfaction of withholding obligations or in payment of the exercise or reference price in accordance with information the terms thereof as in reasonable detail regarding effect on the date hereof or in connection with the forfeiture of any material transactions rights, options or stock appreciation rights granted under a Company Equity Plan);
(excluding investment transactions ii) issue, deliver, sell, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than (A) the Company Equity Awards granted in the ordinary course of business consistent with past practice, not to exceed those amounts set forth on Section 4.1(a)(ii) of the Company Disclosure Letter, (B) in connection with the settlement of equity compensation granted prior to the date of this Agreement under Company Benefit Plans as in effect on the date hereof, (C) as required by any Company Benefit Plan as in effect on the date hereof, (D) upon conversion or exchange of debt or registered securities outstanding prior to the Measurement Date and disclosed in any Company Filed SEC Document, or (E) the Company Equity Awards to be granted as set forth on Section 4.1(a)(ii) of the Company Disclosure Letter;
(iii) license, grant any rights to or transfer any of the material Intellectual Property owned or, used or held for use by the Company or its Subsidiaries, other than grants of non-exclusive licenses in the ordinary course of business consistent with past practice;
(iv) abandon, cancel, fail to renew, fail to continue to prosecute, protect or defend or otherwise dispose of any of the material Intellectual Property owned or, used or held for use by the Company or its Subsidiaries;
(v) other than in the ordinary course of business consistent with past practice (A) amend, renew, terminate or waive in any material respect any Company Material Contract, except for amendments or renewals without material adverse changes, material additions or material deletions of terms, or (B) enter into any new Contract that would be required to be listed in Section 3.1(o) of the Company Disclosure Letter had such Contract been in effect on the date of this Agreement;
(vi) (A) acquire an interest in any real property, whether through purchase, lease or otherwise, (B) enter into any joint venture or analogous transaction, (C) merge with or enter into a consolidation with or otherwise acquire any interest in any Person, or acquire a substantial portion of the assets or business of any Person (or any division or line of business thereof), (D) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or any other reorganization, or (E) enter into any new line of business, except (1) in the case of clauses (A), (B), and (C) (but including specifically excluding any merger or consolidation of the Company with any other Person under clause (C)) (x) transactions involving only direct or indirect wholly owned Subsidiaries of the securitization Company and (y) guarantees permitted under Section 4.1(a)(vi) and (2) in the case of Assets clause (A), leases in the ordinary course of business;
(vii) (A) transfer, sell, lease, sublease, license, sublicense or otherwise dispose of any material assets or material properties of the Company or any of its Subsidiaries or (B) mortgage or pledge any material assets or material properties of the Company Subsidiary and transactions involving derivative securitiesor any of its respective Subsidiaries, or subject any such assets or properties to any other Lien (except Permitted Liens), whether involving a purchase or saleother than, that it or any Company Subsidiary is seriously considering;
in the case of both clause (c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported lossesA) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
clause (d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated herebyB), (ii1) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii2) assets and properties associated with discontinued operations, (3) consummating a transaction previously disclosed in any Company Filed SEC Document, or (4) sales or other dispositions in one or more transactions with respect to which the greater of the aggregate consideration or fair market value does not exceed $7.5 million;
(viii) create, incur or assume any indebtedness for money borrowed in the aggregate money, or issue any debt securities or any right to acquire debt securities, assume, guarantee, endorse or otherwise become liable or responsible (whether, directly, contingently or otherwise) for the Company and the Company Subsidiaries in excess indebtedness of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parentanother Person, enter into any material partnershipContract to maintain any financial statement condition of another Person, joint venture enter into any capital lease or profit sharing contractother arrangement having the economic effect of any of the foregoing, or enter into any other than contracts with insurance agents guarantees or assurances against future performance or loss, except (A) indebtedness incurred in the ordinary course of business and consistent with past practicespractice under the Company’s current borrowing Contracts or any refinancing thereof, (viB) enter any inter-company indebtedness solely involving the Company or its direct or indirect wholly owned Subsidiaries, (C) as required by Contracts in effect on the date hereof or entered into any contract limiting in the ability ordinary course of business, or (D) guarantees by the Company of indebtedness of its Subsidiaries or guarantees by its Subsidiaries of the Company and its other Subsidiaries, which indebtedness is incurred in compliance with this Section 4.1(a)(viii);
(ix) waive, release, assign, settle or compromise any pending or threatened Action which (A) is material to the business of the Company and its Subsidiaries, taken as a whole, (B) otherwise involves the payment by the Company of an amount in excess of $5,000,000 (excluding any amounts that may be paid under insurance policies), other than settlements or compromises of any pending or threatened Action reflected or reserved against in the balance sheet (or the notes thereto) of the Company Subsidiary to engage as of September 30, 2015 included in the Company Filed SEC Documents, or (C) involves any business, to compete with admission of criminal wrongdoing;
(x) except as required by any Person, to do business with any Person Company Benefit Plan in effect on the date of this Agreement or in any location or to employ any Personas required by Law, (viiA) increase any compensation or benefit to, or enter into or amend any contract relating to the direct employment, change-in-control or indirect guarantee of severance Contract with, any obligation of any Person in respect of indebtedness for borrowed money director, officer or other financial obligation employee, other than, with respect to employees who are not directors, officers or employees at the level of any Person other than Senior Vice President or above, increases in compensation or benefits in the ordinary course of business consistent with past practice, (viiiB) enter into grant any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated herebymaterial bonuses, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment other than performance-based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) bonuses in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past (C) enter into or presentadopt any new material Company Benefit Plan (including any stock option, stock benefit or stock purchase plan) or amend or modify, in a manner that would materially increase costs to the Company, any existing Company Benefit Plan or accelerate the vesting of any compensation (including options, restricted stock, restricted stock units, warrants, other shares of capital stock or rights of any kind to acquire any shares of capital stock or equity-based awards) for the benefit of any director, officer or other employee, (viD) voluntarily recognizegrant to any director, officer or other employee any right to receive, or involuntarily become subject topay to any director, officer or other employee, any labor organization severance, change-in-control, retention, termination or any other Person as a collective bargaining representative of one similar compensation or more bargaining units comprising a material number of employees, benefits or increases therein (vii) other than obligations that arise by operation the payment of law cash severance or under the by-laws provision of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than continued welfare benefits in the ordinary course of business consistent with past practice), or (E) take any action to accelerate any payment or benefit, or the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease funding of any products payment or services benefit, payable or group to be provided to any director, officer or other employee; provided, however, that each of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and Parent will designate one or more Persons to serve as point people for purposes of efficiently and expeditiously discussing and considering requests for consent or waivers under this Section and any such additional requests therefor made by the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partyCompany;
(hxi) Other than change any of its financial or Tax accounting policies or procedures currently in effect, except (A) as required by GAAP, SEC Regulation S-X, or a Governmental Entity or quasi-Governmental Entity (including the Financial Accounting Standards Board or any similar organization) or (B) as required by Law;
(xii) make (except for elections made in the ordinary course of business consistent with past practicebusiness) or change any material Tax election, the Company shall notchange any Tax accounting period for purposes of a material Tax or material method of Tax accounting, and shall not permit file any Company Subsidiary tomaterial amended Tax Return, waive settle or compromise any rights with audit or proceeding relating to a value in excess material amount of $100,000 or any other rights which are material to any contract or make any paymentTaxes, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts except in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber agree to an extension or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition waiver of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as statute of limitations with respect to a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary toTaxes, enter into any material contract “closing agreement” within the meaning of Section 7121 of the Code (or amend or waive any material similar provision of any material contract which would involve the payment by the Company state, local or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iiiU.S. Law) with respect to any material Tax, surrender any right to claim a material Tax matter, change refund or take any action that would require filing of its methods a “gain recognition agreement” (within the meaning of reporting the Treasury Regulations promulgated under Section 367 of the Code) to avoid current recognition of a material amount of income or deductions gain for federal income tax purposes from those employed in the preparation of its U.S. federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Lawpurposes;
(sxiii) Other other than in the ordinary course of business and consistent with past practice, neither as reasonably determined by the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions to likely be necessary to maintain value and functionality of the Company’s facilities (whether as a result of a casualty or otherwise and whether or not covered by insurance), make aggregate capital expenditures that are greater than the aggregate amount of the Company’s budgeted capital expenditures set forth in cashSection 4.1(a)(xiv) of the Company Disclosure Letter;
(xiv) amend the Company Charter or the Company Bylaws or adopt any stockholder rights plan, stock “poison pill” antitakeover plan or propertysimilar device that would apply to the Mergers;
(xv) in respect of enter into any capital stock of transaction or Contract between the Company or any Company Subsidiary or redeemof its Subsidiaries, purchase or otherwise acquire on the one hand, and any of the capital stock Company’s Affiliates (other than wholly owned Subsidiaries of the Company), on the other hand, that would be required to be disclosed by the Company or any Company Subsidiary; andunder Item 404 of Regulation S-K under the Securities Act;
(txvi) Neither the Company nor enter into, or amend or modify in any Company Subsidiary shall agreematerial respect, in writing any collective bargaining Contract, card check neutrality/labor peace Contract or otherwiseaccretion provisions with any labor union; or
(xvii) authorize, or commit or agree to take take, any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (Jarden Corp)
Conduct of Business by the Company. The Company covenants (a) From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) as may be agreed in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise expressly permitted may be contemplated or contemplated required by this Agreement or (iv) as set forth on in Section 5.1(a) of the Company Disclosure Schedule:
(a) The , the Company shallcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted, and that such entities shall cause each Company Subsidiary to, conduct its business only not take any action except in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary shall use all their commercially reasonable efforts to preserve intact its their present business organization lines of business, maintain their rights and franchises and preserve their relationships with customers and suppliers; provided, however, that no action by the Company or its regular services toSubsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. The Company shall (i) promptly notify Parent of any material change in its condition (financial or otherwise) or business or any termination, cancellation, repudiation or material breach of any Company Material Contract (or communications indicating that the same may be contemplated), and maintain its relationships with(ii) give prompt notice to Parent of any change, policyholdersoccurrence, insurerseffect, reinsurerscondition, agentsfact, sales event, or circumstance known to the Company that is reasonably likely, individually or taken together with all other changes, occurrences, effects, conditions, facts, events and distribution organizationscircumstances known to such party, underwritersto result in a Company Material Adverse Effect; provided, investment customershowever, brokers, suppliers and all others having business dealings that no unintentional failure by the Company to provide a required notice under the last sentence of this Section 5.1(a) with it;respect to any matter that would not result in a failure of the conditions set forth in Section 6.3(a) shall result in a failure of the condition set forth in Section 6.3(b).
(b) Except as contemplated by this AgreementThe Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the Company:
(i) except in the ordinary course of business or as disclosed in Section 5.1(b)(i) of the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries that is not wholly owned by the Company Subsidiary or Subsidiaries of any such Subsidiaries to, make authorize or propose to pay any dividends on or make any change distribution with respect to its outstanding shares of capital stock (whether in its dividend practices cash, assets, stock or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets other securities of the Company or of any Company Subsidiary and transactions involving derivative securitiesits Subsidiaries), whether involving a purchase except (A) dividends or sale, that it or distributions by any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect Subsidiaries only to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability Subsidiary of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (iB) sell, lease, mortgage, encumber dividends or otherwise grant any interest in or dispose distributions required under the applicable organizational documents of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract entity in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).or
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to during the period from the date of this Agreement and including continuing until the earlier of the termination of this Agreement or the Effective Time, unless Parent Acquiror shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or and except as set forth on in Section 4.01 of the Company Disclosure Schedule:
(a) The , the Company shall, shall conduct its business and shall cause each Company Subsidiary to, conduct the businesses of its business subsidiaries to be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company Subsidiary shall use all reasonable efforts commercial efforts, subject to the terms of this Agreement, to preserve substantially intact its present the business organization of the Company and its subsidiaries, to keep available the services of the present officers, employees and consultants of the Company and its subsidiaries and to preserve the present relationships of the Company and its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment subsidiaries with customers, brokers, suppliers and all others having other persons with which the Company or any of its subsidiaries has significant business dealings with it;
(b) Except relations. By way of amplification and not limitation, except as contemplated by this Agreement, neither the Company shall notnor any of its subsidiaries shall, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, and shall except as set forth in Section 4.01 of the Company Disclosure Schedule, directly or indirectly do, or propose to do, any of the following without the prior written consent of Acquiror, which, in the case of clauses (c), (d)(iv), (e), (f), (h) or (i), will not permit be unreasonably withheld or delayed:
(a) amend or otherwise change the Company Charter Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) in the Company, any of its subsidiaries or affiliates (except for the issuance of shares of Company Subsidiary toCommon Stock issuable pursuant to Company Stock Options outstanding on the date hereof or pursuant to the Company Employee Plans set forth in Section 4.01(b) of the Company Disclosure Schedule or in exchange for the Exchangeco Shares);
(c) sell, pledge, dispose of or encumber any assets of the Company or any of its subsidiaries (except for (i) sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $20 million in the aggregate);
(i) declare, set aside, make or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, except that a wholly-owned subsidiary of the Company may declare and pay a dividend to its parent that is not a cross-border dividend and except that the Company may declare and pay prior to the Effective Time quarterly cash dividends of up to $0.10 per Share and equivalent dividends on the Exchangeco Shares consistent with past practice, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iii) except (A) as contemplated by this Agreement, (B) as required by the terms of any security as in effect on the date hereof and set forth in Section 4.01(d) of the Company Disclosure Schedule and (C) to the extent necessary to effect withholding to meet minimum tax withholding obligations or pay the exercise price in connection with the exercise of any Company Stock Option, amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, shares of Company Common Stock or Exchangeco Shares, or any option, warrant or right, directly or indirectly, to acquire any such securities, or propose to do any of the foregoing, (iv) settle, pay or discharge any claim, suit or other action brought or threatened against the Company with respect to or arising out of a stockholder equity interest in the Company, or (v) make any change cross-border capital contributions to a subsidiary;
(i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, limited liability company or other business organization or division thereof; (ii) incur any indebtedness for borrowed money, except for (x) aggregate borrowings and reborrowings under the Company's or any of its subsidiaries' medium term note and commercial paper programs (but not under the credit facilities used to support the commercial paper program) and (y) other borrowing, not in its dividend practices excess of $500 million in the aggregate; (iii) issue any debt securities or policies or assume, guarantee (other than guarantees of the Company's subsidiaries entered into in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies the ordinary course of business and except as required by any agreement in any material respect; effect as of the date hereof and identified in Section 4.01(e) of the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding Disclosure Schedule) or endorse, or otherwise as an accommodation become responsible for, the obligations of any material transactions (excluding investment transactions person, or make any loans or advances, except in the ordinary course of business consistent with past practice, practice (but including transactions involving the securitization of Assets not loans or advances to employees of the Company to fund the exercise price of Company Stock Options or otherwise to purchase shares of the Company Common Stock); or (iv) authorize any Company Subsidiary and transactions involving derivative securities)capital expenditures or purchases of fixed assets (other than assets acquired to be leased) which are, whether involving a purchase or salein the aggregate, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in 15 million over the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days next 12 month period; or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 4.01(e);
(iiii) increase in any manner the compensation ofor severance payable or to become payable to its directors, officers, employees or consultants, except for increases in salary or wages of employees of the Company or its subsidiaries, including in connection with promotions, in accordance with past practices; or (ii) grant any severance or termination pay to (except to make payments required to be made under obligations existing on the date hereof in accordance with the terms of such obligations), or enter into or amend any contract relating to the borrowing of money byemployment or severance agreement, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers current or other employees or agents prospective employee of such party the Company or any of its Subsidiaries or any other Person;
(g) Other than subsidiaries, except for new hire employees in the ordinary course of business consistent with past practicewhose annual salary does not exceed $200,000 and whose severance benefits do not exceed one times annual salary (base and bonus); or (iii) establish, the adopt, enter into or amend any collective bargaining agreement, Company shall notEmployee Plan, and shall not permit including, without limitation, any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures plan that provides for the purchase payment of bonuses or lease incentive compensation, trust, fund, policy or arrangement for the benefit of any products current or services former directors, officers, employees or group consultants or any of products their beneficiaries, except, in each case, as may be required by law;
(g) take any action to change accounting policies or services procedures (other than including, without limitation, procedures with respect to Investment Assetsrevenue recognition, payments of accounts payable and collection of accounts receivable) which except as required by a change in one GAAP or a series of related transactions exceed $100,000 or which in the aggregate for interpretations thereof occurring after the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partydate hereof;
(h) Other make any tax election or settle or compromise any United States federal, state, local or non-United States tax liability;
(i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $10 million in the aggregate, other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess practice of $100,000 liabilities reflected or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts reserved against in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth statements contained in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions SEC Documents or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or incurred in the ordinary course of business and consistent with past practice;
(oj) The Company shallmaterially restructure or materially change its gap position, and shall cause each Company Subsidiary tothrough purchases, maintain uninterrupted its existing insurance coverage of all types sales, xxxxxx, swaps, caps or collars or otherwise or the manner in effect which any current xxxxxx are classified or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;reported; or
(pk) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax mattertake, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, agree in writing or otherwiseotherwise to take, to take any of the actions prohibited by the foregoing clauses (adescribed in Sections 4.01(a) through (s)j) above, or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect or prevent the Company from performing or cause the Company not to perform its covenants hereunder or cause any condition to the Company's obligations to consummate the transactions contemplated hereby set forth in Article VI not to be satisfied.
Appears in 1 contract
Samples: Merger Agreement (Cit Group Inc)
Conduct of Business by the Company. The Company covenants and agrees as to itself and Except for matters set forth in the Company Subsidiaries thatDisclosure Letter, at all times up to and including required by applicable Law or otherwise expressly permitted or expressly contemplated by this Agreement or with the Effective Time, unless prior written consent of Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, conditioned or as otherwise expressly permitted delayed, it being understood and agreed that Parent shall use commercially reasonable efforts to approve or contemplated deny any request by the Company for written consent pursuant to this Section 5.01(b) within five Business Days of such request), from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
(a) The Effective Time, the Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course in all material respects and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its present business organization and preserve its regular services toadvantageous business relationships. In addition, and maintain its relationships withwithout limiting the generality of the foregoing, policyholdersexcept for matters set forth in the Company Disclosure Letter, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as required by applicable Law or otherwise expressly permitted or expressly contemplated by this AgreementAgreement or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, make do any of the following:
(i) (A) amend the Company Charter, (B) amend the Company Bylaws or propose to (C) amend the charter or organizational documents of any Company Subsidiary;
(ii) (A) declare, set aside or pay any dividends on, or make any change other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of its dividend practices capital stock, other equity interests or policies voting securities, other than dividends and distributions by a direct or indirect wholly owned Company Subsidiary to its stockholders or other equity holders, (B) other than with respect to any wholly owned Company Subsidiary, split, combine, subdivide or reclassify any of its capital stock, other equity interests or voting securities or securities convertible into or exchangeable or exercisable for capital stock or other equity interests or voting securities or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its underwritingcapital stock, pricingother equity interests or voting securities, claimsother than as permitted by Section 5.01(b)(ii), risk retentionor (C) repurchase, investmentredeem or otherwise acquire, reinsurance practices or policies offer to repurchase, redeem or otherwise acquire, any capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or exchangeable or exercisable for capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, except pursuant to (1) the Company RSUs, in each case, pursuant to their terms in effect on the date hereof or thereafter granted as permitted by the provisions of Section 5.01(b)(iii) or (2) any such transaction by the Company or a wholly owned Company Subsidiary in respect of such capital stock, securities or interests in a wholly owned Company Subsidiary;
(iii) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien (A) any shares of capital stock of the Company or any Company Subsidiary, other than the issuance of Company Common Stock upon the vesting and settlement of Company RSUs outstanding at the close of business on the date of this Agreement and in accordance with their terms in effect at such time or thereafter granted as permitted by the provisions of this Section 5.01(b)(iii) or the issuance of shares of capital stock of a wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary, (B) any other equity interests or voting securities of the Company or any Company Subsidiary, other than in the case of a Company Subsidiary, an issuance, delivery or sale to the Company or any wholly owned Company Subsidiary, (C) any securities convertible into or exchangeable or exercisable for capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary, other than in the case of a Company Subsidiary, an issuance, delivery or sale to the Company or any wholly owned Company Subsidiary, (D) any warrants, calls, options or other rights to acquire any capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary, other than in the case of a Company Subsidiary, an issuance, delivery or sale to the Company or any wholly owned Company Subsidiary, (E) any rights issued by the Company or any Company Subsidiary that are linked in any material respect; and way to the price of any class of the Company agrees that it will notify Parent and provide Parent Capital Stock or any shares of capital stock of any Company Subsidiary, the value of the Company, any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of the Company or any Company Subsidiary, other than in the case of a Company Subsidiary, an issuance, delivery or sale to the Company or any wholly owned Company Subsidiary, or (F) any Company Voting Debt;
(iv) except as required to comply with information applicable Law or to comply with any Company Benefit Plan as in reasonable detail regarding effect as of the date of this Agreement, (A) establish, adopt, enter into, terminate or materially amend, or take any material transactions action to accelerate the vesting or payment of, any compensation or benefits under, any Company Benefit Plan (excluding investment transactions or any award thereunder), (B) grant or increase in any manner the salaries, bonuses, or incentive-based compensation or benefits of or pay any bonus to, or grant any loan to any Company Participant other than such grants, increases or payments made in the ordinary course of business consistent with past practicepractice to Company Participants who are not “named executive officers” as defined in Item 402(a)(3) of Regulation S-K promulgated under the Securities Act, but (C) grant or pay any change in control, retention, severance, termination or similar compensation or benefits to, or increase in any manner the change in control, retention, severance, termination or similar compensation or benefits of, any Company Participant, (D) take any action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan, (E) change any actuarial or other assumption used to calculate funding obligations with respect to any Company Pension Plan, except to the extent required by applicable Law or GAAP, or (F) change the manner in which contributions to any Company Pension Plan are made or the basis on which such contributions are determined;
(v) make any material changes in financial accounting methods, principles or practices, except insofar as may be required (A) by GAAP (or any interpretation thereof), (B) by any applicable Law, including transactions involving Regulation S-X under the securitization Securities Act, or (C) by any Governmental Entity or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization);
(vi) other than in the ordinary course of Assets business, (A) make any Tax election that results in a material amount of Taxes of the Company or any Company Subsidiary, (B) make any changes to any existing Tax election that results in a material amount of Taxes of the Company or any Company Subsidiary, (C) settle or compromise any Tax claim or assessment or surrender any right to claim a Tax refund with respect to a material amount of Taxes, (D) file an amendment to any Tax Return if such amendment results in a material amount of Taxes or (E) fail to pay any material Taxes that are due and payable;
(vii) except as permitted under Section 5.01(b)(x), make any acquisition of, or investment in, any properties, assets, securities or business (including by merger, sale of stock, sale of assets or otherwise) if the aggregate amount of consideration paid or transferred by the Company and the Company Subsidiaries in connection with all such transactions would exceed $5 million, except for the acquisitions of supplies, inventory, merchandise or products in the ordinary course of business; provided, that in no event shall the Company or any of the Company Subsidiaries make any acquisition or investment which would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Merger and the other transactions contemplated hereby;
(viii) sell or lease to any Person, in a single transaction or series of related transactions, any of its material properties or assets for consideration, except (A) ordinary course dispositions of inventory and dispositions of obsolete, surplus or worn out assets or assets that are no longer used or useful in the conduct of the business of the Company or any of the Company Subsidiaries or (B) transfers among the Company and its wholly owned Subsidiaries;
(ix) (A) incur any Indebtedness, except for (1) Indebtedness incurred under the Company’s revolving credit facility, as existing on the date of this Agreement (including, for the avoidance of doubt, the aggregate amount of commitments in effect on the date of this Agreement) (including in respect of letters of credit), in the ordinary course of business, (2) letters of credit, bank guarantees, security or performance bonds or similar credit support instruments, overdraft facilities or cash management programs, in each case issued, made or entered into in the ordinary course of business, (3) intercompany Indebtedness among the Company and its wholly owned Subsidiaries, (4) guarantees by the Company of Indebtedness of the Company Subsidiaries, which Indebtedness is incurred in compliance with this Section 5.01(b)(ix), and (5) capitalized lease obligations in respect of software and equipment and installment obligations in respect of insurance, in each case incurred in the ordinary course of business, (B) enter into any swap or hedging transaction or other derivative agreements other than in the ordinary course of business or (C) make any loans, capital contributions or advances to, or investments in, any Person other than (x) to the Company or any wholly owned Subsidiary of the Company or (y) as permitted pursuant to Section 5.01(b)(vii);
(x) make any capital expenditures in excess of $105,000,000 annually;
(xi) except in the ordinary course of business, enter into any Contract or amend any Contract if the consummation of the Merger and the other transactions contemplated hereby would conflict with, result in any violation of or default (with or without notice or lapse of time, or both) under, give rise to a right of termination, cancellation or acceleration of, give rise to an obligation to make an offer to purchase or redeem any Indebtedness or capital stock, voting securities or other equity interests or any loss of a material benefit under, or result in the creation of any Lien (other than Permitted Liens) upon any of properties or assets of the Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringunder such new Contract or as a result of such amendment to such existing Contract, as applicable;
(cxii) The grant any Lien (other than Permitted Liens) on any of its material assets other than (A) to secure Indebtedness and other obligations in existence at the date of this Agreement (and required to be so secured by their terms) or permitted under Section 5.01(b)(ix) or (B) to the Company shall not make or to a wholly owned Subsidiary of the Company;
(xiii) sell, transfer, license, abandon, permit to lapse or otherwise dispose of any material change Intellectual Property owned by the Company or any of the Company Subsidiaries, except grants of non-exclusive licenses (without any right to sublicense) of such material Intellectual Property in accounting methods the ordinary course of business;
(xiv) settle any pending or practicesthreatened Action against the Company or any of the Company Subsidiaries, including without limitation other than settlements of any change pending or threatened Action (A) in which the Company or any of the Company Subsidiaries is named as a nominal defendant, (B) with respect to establishment which there is a specific reserve in the balance sheet (or the notes thereto) of reserves the Company as of March 31, 2017 included in the Filed Company SEC Documents for unearned premiums, losses an amount not materially in excess of the amount so reflected or reserved (including without limitation incurred but excluding any amount that would be expected to be paid or reimbursed under insurance policies or for which the Company or any of the Company Subsidiaries is entitled to indemnification or contribution) or (C) that do not reported lossesinvolve payment by the Company or the Company Subsidiaries of more than $2,000,000 individually (excluding any amount that would be expected to be paid or reimbursed under insurance policies or for which the Company or any of the Company Subsidiaries is entitled to indemnification or contribution); provided that no settlement of any pending or threatened Action may: (1) and loss adjustment expensesinvolve any material injunctive or equitable relief, or impose material restrictions, on the business activities of the Company or the Company Subsidiaries, (2) involve any change in depreciation admission of wrongdoing by the Company or amortization policies the Company Subsidiaries, (3) involve the grant of any license, cross-license or rates adopted similar arrangement by it, except as required the Company or any of the Company Subsidiaries with respect to any material Intellectual Property owned by Applicable Law, GAAP or SAPlicensed to the Company or any of the Company Subsidiaries or (4) impose any restrictions on the use by the Company or any of the Company Subsidiaries of any material Intellectual Property owned by or licensed to the Company or any of the Company Subsidiaries;
(dxv) The cancel any material Indebtedness owed to the Company shall notor a Company Subsidiary or waive any claims or rights of substantial value, and shall not permit in each case other than in the ordinary course of business;
(xvi) enter into, modify, amend or terminate any Company Subsidiary toCollective Bargaining Agreement, other than (A) the entry into new collective bargaining or other labor union Contracts in the ordinary course of business required to be entered into by any non-US Law, (iB) amend its charter modifications, amendments, renewals or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series terminations of related Liabilities in excess of $200,000 other than such Contracts in the ordinary course of business consistent with past practicepractice or (C) any modification, amendment, renewal or termination of any collective bargaining agreement to the extent required by applicable Law;
(iiixvii) incur assign, transfer, lease, cancel, fail to renew or fail to extend any indebtedness material Company License issued by the FCC or any State Regulator or discontinue any operations that require prior regulatory approval for money borrowed in the aggregate for discontinuance, other than (A) transfers between the Company and the Company Subsidiaries in excess or between Company Subsidiaries and (B) non-renewal or non-extension of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree Company Licenses solely related to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability discontinued businesses of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to and that do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness not require regulatory approval for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesdiscontinuance;
(exviii) The Company shall notauthorize, nor shall it permit adopt or implement a plan of complete or partial liquidation or dissolution of the Company; or
(xix) authorize any Company Subsidiary to, issue or sell any shares of or interests inof, or rights of commit, resolve or agree to take any kind to acquire any shares of or interests inof, or to receive participate in any payment based on the value negotiations or discussions with any other Person regarding any of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etcforegoing actions.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as Except for matters expressly permitted by the Transaction Agreements, from the date of this Agreement to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on Time the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary and usual course of business and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all its reasonable best efforts to preserve intact its present current business organization organization, keep available the services of its officers and preserve its regular services to, employees and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers vendors, licensors, licensees, distributors and all agents and others having business dealings with it;
(b) Except as contemplated them. In addition, and without limiting the generality of the foregoing, except for matters expressly permitted by this Agreement, and except as set forth in SECTION 6.01 of the Company Disclosure Letter, from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, do any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed):
(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 dividends and distributions by a direct or propose 37 indirect wholly owned subsidiary of the Company to its parent, (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 shares of its capital stock, (C) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any Company Subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities or (D) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or reorganization of the Company or any of the Company Subsidiaries;
(ii) authorize for issuance, issue, deliver, sell or grant (A) any shares of its capital stock, (B) any Voting Company Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, 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 the issuance of Company Common Stock upon the exercise of Company Employee Stock Options outstanding on the date of this Agreement and in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any Person or division thereof or (B) any assets outside the ordinary and usual course of business;
(A) grant to any present or former employee, officer or director of the Company or any Company Subsidiary any increase in compensation or fringe benefits, except for increases in salary for non-officer employees in the ordinary and usual course of business, (B) grant to any present or former employee, officer or director of the Company or any Company Subsidiary any increase in severance or termination pay, (C) other than entering into employment agreements with employees of the Company approved in advance by Parent, enter into or amend any employment, consulting, indemnification, severance or termination agreement with any such present or former employee, officer or director, (D) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Company Plan, (E) except as permitted or required under SECTION 7.04, take any action to accelerate any rights or benefits, or make any material determinations not in the ordinary and usual course of business, under any collective bargaining agreement or Company Plan, (F) loan or advance money or other property in excess of $25,000 in the aggregate, to all present or former employees, officers or directors of the Company or any Company Subsidiary or (G) except as permitted or required under SECTION 7.04, grant any new, or amend any existing, Company Employee Stock Option or enter into any agreement under which any Company Employee Stock Option would be required to be issued;
(vi) make any change in its dividend accounting methods, principles or practices affecting the reported consolidated assets, liabilities or policies results of operations of the Company, except insofar as may have been required by a change in GAAP;
(vii) sell, lease, license or in its underwritingotherwise dispose of or permit to become subject to any Lien, pricingother than a Permitted Lien, claimsany properties or assets, risk retentiontangible or intangible, investment, reinsurance practices except sales of inventory and excess or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions obsolete assets in the ordinary and usual course of business consistent with past practice, but including transactions involving the securitization of Assets business;
(viii) except as disclosed in Section 6.01(a)(viii) of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary toDisclosure Letter, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iiiA) incur any indebtedness for borrowed money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for or guarantee any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any another Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of debt securities or interests in, warrants or other rights of any kind to acquire any shares debt securities of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course guarantee any debt securities of business consistent with past practiceanother Person, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit enter into any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement "keep well" or other employee benefit contract, plan or policy, (ii) enter into or materially amend agreement to maintain any severance contract, (iii) increase in any manner the compensation of, financial statement condition of another Person or enter into any contract relating to arrangement having the borrowing economic effect of money by, its directors, officers or other employeesany of the foregoing, except pursuant for short-term borrowings incurred in the ordinary and usual course of business, or (B) make any loans, advances or capital contributions to, or investments in, any other Person, other than to or in the terms Company or any direct or indirect wholly owned subsidiary of agreements the Company or plans as currently to customers of the Company or a Company Subsidiary in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, the ordinary and usual course of business;
(ivix) increase by more than 5% the aggregate number of its employees, (v) pay make or agree to pay make any pensionnew capital expenditure or expenditures that, retirement allowance or other employee benefit not required by in the current terms aggregate, are in excess of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person$250,000;
(gx) Other make any Tax election or settle or compromise any Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary and usual course of business consistent or in accordance with past practicetheir terms, of liabilities reflected or reserved against in the most recent consolidated financial statements of the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which included in the aggregate for Filed SEC Documents or incurred in the Company ordinary and usual course of business, (B) cancel any material indebtedness (individually or in the Company Subsidiaries taken as a whole exceed $200,000aggregate) or waive any claims or rights of substantial value or (C) waive the benefits of, except for expenditures relating or agree to this Agreement and the consummation of the transactions contemplated herebymodify in any manner, and expenditures required to be made pursuant to existing contracts any confidentiality, standstill or similar agreement to which the Company or any Company Subsidiary is a party;
(hxii) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit amend any Company Subsidiary to, waive any rights with a value Material Contract providing for payments or otherwise involving amounts in excess of $100,000 or any other rights which are material to any contract or make any paymentor, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts except in the ordinary and usual course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company SubsidiaryContract; and
(txiii) Neither the Company nor authorize any Company Subsidiary shall agreeof, in writing or otherwise, commit or agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and Except (i) for matters set forth in Section 5.1(a) of the Company Subsidiaries thatDisclosure Schedule, at all times up (ii) as expressly permitted by or required in accordance this Agreement, (iii) as required by applicable Law or (iv) as may be consented to and including the Effective Time, unless in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or as otherwise expressly permitted or contemplated by conditioned), from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
Effective Time, or, if earlier, the termination of this Agreement in accordance with its terms (a) The such time, the “Pre-Closing Period”), the Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, (x) conduct its business only in all material respects in the ordinary course Ordinary Course of Business and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall (y) use all commercially reasonable efforts to (1) preserve intact the material components of its present business organization organization, (2) keep available the services of its present officers and key employees in all material respects, (3) preserve its regular services torelationships with manufacturers, suppliers, vendors, distributors, Governmental Entities with jurisdiction over the Company’s operations, customers, licensors, licensees and others with which it has material business dealings, (4) comply in all material respects with all applicable Laws, and (5) maintain its relationships within effect all Company Permits in accordance with their terms and renew any Company Permit that would otherwise expire pursuant to their terms. In addition, policyholdersand without limiting the generality of the foregoing, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as except for matters set forth in the Company Disclosure Schedule or otherwise expressly permitted or expressly contemplated by this AgreementAgreement or required by applicable Law or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), during the Pre-Closing Period, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;following:
(i) The Company shall notestablish a record date for, and shall not permit any Company Subsidiary todeclare, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declareaccrue, set aside or pay any dividends dividend or distributions make any other distribution (whether in cash, stock or property) in respect of any shares of its capital stock or other equity interests or securities or repurchase, redeem or otherwise reacquire any shares of its capital stock or other equity interests or securities (except repurchases from terminated employees, directors or consultants of the Company or in connection with the payment of the exercise price and/or withholding Taxes incurred upon the exercise, settlement or vesting of any award or purchase rights granted under the Company Stock Plans in accordance with the terms of such award in effect on the date of this Agreement);
(ii) sell, issue, grant, modify, reprice, pledge or otherwise dispose of or encumber or authorize: (A) any capital stock or other equity interests or security of the Company or any of its Subsidiaries (except for shares of Company Subsidiary Common Stock issued upon the valid exercise or redeemconversion of outstanding Company Options, purchase Company ESPP Options or otherwise Company Warrants or settlement of Company RSUs); (B) any option, warrant or right to acquire any capital stock or any other equity interests or security (other than Company Equity Awards granted to (1) new employees, service providers or board members who were offered a specific number of Company Equity Awards as part of offer letters entered into prior to the date of this Agreement or, in the Ordinary Course of Business, after the date of this Agreement and (2) existing employees, service providers or board members in the Ordinary Course of Business as annual incentive compensation; provided that the aggregate number of Company Equity Awards granted during the Pre-Closing Period pursuant to the preceding clauses (1) and (2), whether or not any such Company Equity Awards are exercised, terminated or forfeited during the Pre-Closing Period, may not exceed the number of Company Equity Awards set forth in Section 5.1(a)(ii) of the Company Disclosure Schedule, the strike prices of any such Company Options shall be determined using the fair market valuation methodology set forth in Section 5.1(a)(ii) of the Company Disclosure Schedule and such Company Equity Awards shall only be exercisable for Company Common Stock); or (C) any instrument convertible into or exchangeable for any capital stock or other equity interests or security of the Company or any Company Subsidiary; andof its Subsidiaries;
(tiii) Neither except as required by the Company nor any Company Subsidiary shall agreeterms of this Agreement, in writing adopt, amend, terminate or otherwisewaive or propose to adopt, to take amend, terminate or waive any of the actions prohibited Company’s or its Subsidiaries’ Organizational Documents, or effect or be a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction except for the Contemplated Transactions;
(iv) except as required by the terms of this Agreement, adopt, amend, terminate or waive or propose to adopt, amend, terminate or waive any of the Company Stock Plans, any provision of any agreement evidencing any o outstanding stock option, any restricted stock unit grant, or performance-based vesting restricted stock unit grant, or otherwise modify any of the terms of any outstanding option, restricted stock unit, warrant or other equity interest or security or any related Contract;
(v) adopt or implement any stockholder rights plan or similar arrangement;
(vi) form any Subsidiary or acquire or propose to acquire any equity interest or other interest in, or business of, any other entity or enter into a joint venture with any other entity;
(vii) (A) lend money to any Person (except for the advancement of expenses to employees, directors and consultants in the Ordinary Course of Business), (B) incur or guarantee any indebtedness for borrowed money, (C) guarantee any debt securities of others, or (D) other than the incurrence or payment of Transaction Expenses, make any capital expenditure for any two-month period in excess of 110% of the budgeted capital expenditure amounts for such two-month period set forth in the Company’s operating budget delivered to Parent concurrently with the execution of this Agreement (the “Company Budget”);
(viii) other than as required by applicable Law or the terms of any Company Benefit Plan as in effect on the date of this Agreement: (A) adopt, terminate, establish or enter into any Company Benefit Plan, other than in the Ordinary Course of Business; (B) cause or permit any Company Benefit Plan to be amended in any material respect, other than in the Ordinary Course of Business; or (C) increase or modify the amount or form of the wages, salary, commissions, or bonus compensation payable to any of its directors, officers or employees, other than increases in base salary and annual cash bonus opportunities and payments made in the Ordinary Course of Business not in excess of the amounts set forth in Section 5.1(a)(viii) of the Company Disclosure Schedule;
(ix) recognize any labor union or labor organization, except as otherwise required by applicable Law;
(x) hire any employee, or terminate any existing employee, who (A) has (or would have, if hired) a total target annual compensation opportunity (base salary, target annual bonus, other target incentive opportunity and target cash long-term incentive opportunity) of $350,000 or more or (B) holds (or would hold, if hired) a vice president-level position, in each case, other than termination for cause (as determined in the Company’s reasonable discretion), the hiring of new employees to fill vacant positions in the Ordinary Course of Business, so long as the total target annual compensation opportunity of such new employees does not exceed 10% of the total target annual compensation opportunity of the former employee whose position such new employee fills, and the hiring of new employees to fill new or vacant positions within the salary ranges set next to such positions on Section 5.1(a)(x) of the Company Disclosure Schedule;
(xi) (A) acquire any material asset (including material Intellectual Property Rights, excluding, for the avoidance of doubt, the creation of Intellectual Property Rights in the Ordinary Course of Business) or properties, (B) sell, lease or otherwise irrevocably dispose of any of its material assets or properties (other than Intellectual Property Rights), or (C) grant any Lien, other than a Lien of the type, nature and scope contemplated by clause (ii) or (iii) of the definition of Permitted Lien, with respect to any material assets (including Intellectual Property Rights) or properties, except in the case of clause (C) in the Ordinary Course of Business;
(xii) sell, assign, transfer, license or sublicense Company IP (other than pursuant to non-exclusive licenses granted in the Ordinary Course of Business) or otherwise dispose of any material Company IP (other than the disclosure of Trade Secrets in support of the business of the Company or any of its Subsidiaries, abandonment of applications for registration of Intellectual Property Rights in the ordinary course of prosecution or abandonment of registered Intellectual Property Rights through non-renewal, each of the foregoing in the Ordinary Course of Business);
(xiii) disclose to any third party (other than pursuant to written confidentiality obligations) or otherwise fail to preserve and maintain, any trade secrets, know-how, methods, processes, protocols, specifications, techniques, data or other confidential information or ideas of the Company;
(xiv) make, change or revoke any material Tax election, fail to pay any income Tax or other material Tax as such Tax becomes due and payable, file any amendment making any material change to any Tax Return, settle or compromise any income Tax or other material Tax liability or submit any voluntary disclosure application, enter into any Tax allocation, sharing, indemnification or other similar agreement or arrangement (other than customary commercial contracts entered into in the Ordinary Course of Business the principal subject matter of which is not the allocation of Taxes), request or consent to any extension or waiver of any limitation period with respect to any claim or assessment for any income Tax or other material Taxes (other than pursuant to an extension of time to file any Tax Return granted in the Ordinary Course of Business of not more than seven months), or adopt or change any material accounting method in respect of Taxes;
(xv) enter into, materially amend, terminate or expressly release any material rights under any Company Material Contract or purchase order, work order or quality agreement with respect thereto, or enter into any Contract that would be considered a Company Material Contract if in effect on the date hereof (except that the Company may enter into, and amend, Contracts with a Company Material Customer or Company Material Supplier in the Ordinary Course of Business to the extent such Contract is not, or, if such Contract or amendment was in effect on the date hereof, would not be considered, a Company Material Contract pursuant to clauses (ai) through (sxiii) or clause (xvi) of Section 3.12(a));
(xvi) enter into, or materially amends the milestone, royalty or similar contingent payment terms of, any Contract under which the Company or any of its Subsidiaries has continuing milestone, royalty or similar contingent payment obligations, including upon the achievement of regulatory or commercial milestones or obligation to pay any royalty, dividend or similar payment based on the revenues or profits of the Company or any of its Subsidiaries, in each case, excluding indemnification and performance guarantee obligations provided for in the Ordinary Course of Business;
(xvii) other than in the Ordinary Course of Business, make any expenditures, incur any liabilities or discharge or satisfy any liabilities, in each case, for any two-month period in amounts that exceed 110% of the Company Budget for such two-month period;
(xviii) other than as required by Law or GAAP, take any action to change accounting policies or procedures;
(xix) make or amend any material filings with any Governmental Entity related to any Company Product;
(xx) initiate or settle any Legal Proceeding;
(xxi) enter into or amend any Contract if such Contract or amendment would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Contemplated Transactions;
(xxii) fail to maintain in full force and effect the existing insurance policies of the Company or to renew or replace such insurance policies with comparable insurance policies;
(xxiii) dissolve or liquidate the Company or any Subsidiary thereof;
(xxiv) enter into any new line of business outside of the Company’s existing business;
(xxv) enter into any material transaction other than in the Ordinary Course of Business; or
(xxvi) agree, resolve or commit to do any of the foregoing.
Appears in 1 contract
Samples: Merger Agreement (SomaLogic, Inc.)
Conduct of Business by the Company. The Company covenants and agrees as to itself (a) From the date of this Agreement until the earlier of the Effective Time and the date, if any, on which this Agreement is terminated in accordance with Section 8.1, except (x) as prohibited or required by applicable Law or by any Governmental Entity of competent jurisdiction, (y) as set forth in Section 5.1 of the Company Subsidiaries that, at all times up to and including the Effective TimeDisclosure Letter or (z) as otherwise contemplated or required by this Agreement, unless Parent shall otherwise consent in writing, writing (which consent shall not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by this Agreement or as set forth on delayed), the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct its business only in the ordinary course in all material respects and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all its commercially reasonable efforts to preserve intact in all material respects its present business organization and preserve its regular services togoodwill and relationship with Providers, plan members, suppliers, distributors, licensors, licensees, and maintain other Persons with which it has material business dealings, and Governmental Entities having jurisdiction over its relationships withbusiness, policyholdersand to keep available in the aggregate the services of its workforce; provided, insurershowever, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;that no failure by the Company or any of its Subsidiaries to take any action specifically prohibited by any provision of Section 5.1(b) shall constitute a breach under this Section 5.1(a).
(b) Except Without limiting the generality of the foregoing (except as provided therein), from the date of this Agreement until the earlier of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to Section 8.1, except (x) as required by applicable Law or by any Governmental Entity of competent jurisdiction, (y) as set forth in Section 5.1 of the Company Disclosure Letter or (z) as otherwise contemplated or required by this Agreement, unless Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;:
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter the Company Charter or by-laws (unless contemplated hereby), Company Bylaws;
(ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iiiA) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside aside, make or pay any dividends dividend or distributions other distribution (whether in cash, stock or property) in respect of any of its capital stock stock, except for dividends or distributions by any wholly-owned Subsidiary of the Company to the Company or to any other wholly-owned Subsidiary of the Company, (B) adjust, split, combine, amend the terms of or reclassify any of its capital stock or issue or propose or authorize the issuance of any other securities (including options, warrants or any similar security exercisable for, or convertible into, such other security) in respect of, in lieu of, or in substitution for, shares of its capital stock, except with respect to the capital stock or securities of any wholly-owned Subsidiary, in connection with transactions among the Company Subsidiary and its wholly-owned Subsidiaries or redeemamong the Company’s wholly-owned Subsidiaries or (C) repurchase, purchase redeem or otherwise acquire any shares of the capital stock of the Company or any of its Subsidiaries, or any other equity interests or any rights, warrants or options to acquire any such shares or interests, except (1) for repurchases of shares of Company Common Stock in connection with the exercise of Company Options or in connection with the vesting or settlement of shares of Company Restricted Shares (including in satisfaction of any amounts required to be deducted or withheld under applicable Law), in each case outstanding as of the date of this Agreement or awarded after the date of this Agreement in accordance with the terms of this Agreement or (2) with respect to the capital stock or securities of any Subsidiary; and, in connection with transactions among the Company and one or more of its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries;
(tiii) Neither issue, sell, grant, pledge 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 combination, merger, consolidation, reorganization, liquidation or otherwise) in the capital structure of the Company nor or any of its Subsidiaries, except for (A) the issuance of shares of Company Common Stock in connection with the exercise of Company Options or the vesting or settlement of Company Restricted Shares, in each case outstanding as of the date of this Agreement or awarded after the date of this Agreement to the extent permitted pursuant to clause (B) below, (B) the grant of Company Options or Company Restricted Shares to employees of the Company or any of the Company’s Subsidiaries (other than the individuals listed in Section 5.1(b)(iii) of the Company Disclosure Letter) in connection with the Company’s annual equity award grant procedures or in connection with promotions or new hires, in each case, conducted in the ordinary course of business consistent with past practice, provided that the number of shares of Company Common Stock underlying awards granted under this clause (B) shall not exceed 300,000 and that the awards are granted on terms, including vesting, that are consistent with past practice, (C) issuances by a wholly-owned Subsidiary of the Company of capital stock to such Subsidiary’s parent, the Company or another wholly-owned Subsidiary of the Company or (D) Liens required to be granted by the Company and its Subsidiaries pursuant to the Amended and Restated Credit Agreement;
(iv) merge or consolidate with any other Person or acquire any material assets, product lines or businesses, or make a material investment in (whether through the acquisition of stock, assets or otherwise) any other Person, except for acquisitions of property, inventory and equipment in the ordinary course of business consistent with past practice and for consideration not in excess (in the aggregate for all such acquisitions) of $35 million;
(v) sell, lease, license, subject to a material Lien, except for a Permitted Lien or Liens required to be granted by the Company and its Subsidiaries pursuant to the Amended and Restated Credit Agreement, or otherwise dispose of any material assets, product lines or businesses of the Company or any of its Subsidiaries (including capital stock or other equity interests of any Subsidiary) except for sales, leases or licenses of property, inventory and equipment in the ordinary course of business consistent with past practice and involving assets of the Company or any of its Subsidiaries not in excess (in the aggregate for all such sales, leases and licenses) of $35 million;
(vi) (A) make any material loans, advances or capital contributions to any other Person; (B) create, incur, guarantee or assume any indebtedness for borrowed money (in the aggregate for all such indebtedness) in excess of $35 million, except for, in the case of each of clause (A) and clause (B), (1) transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, (2) any draw-down of funds under the Amended and Restated Credit Agreement in the ordinary course of business consistent with past practice, (3) letters of credit issued under the Amended and Restated Credit Agreement in the ordinary course of business consistent with past practice or (4) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness and in amounts not materially in excess of such existing indebtedness; (C) make or commit to make any capital expenditure in excess of $35 million in the aggregate; or (D) cancel any material debts of any Person to the Company or any Subsidiary of the Company or waive any claims or rights of value, except for cancellations or waivers in the ordinary course of business consistent with past practice and that are not material to the Company and its Subsidiaries taken as a whole;
(vii) except as required by Contracts in effect prior to the date of this Agreement, Company Benefit Plans or applicable Law, (A) increase the compensation or other benefits payable or provided to executive officers of the Company as reported in the Company’s most recent Annual Report on Form 10-K, including anyone hired into such a position, or directors of the Company or its Subsidiaries, except for any 2012 annual increases in compensation and other benefits payable to directors and officers (other than the individuals listed in Section 5.1(b)(iii) of the Company Disclosure Letter) that are consistent with past practice; (B) except in the ordinary course of business consistent with past practice, materially increase the compensation or other benefits payable or provided to the Company’s or its Subsidiaries’ other employees or independent contractors (the ordinary course including, for this purpose, the employee salary, bonus and equity compensation review process and related adjustments substantially as conducted each year and promotions); (C) enter into any employment, change of control, severance or retention agreement with any officer or other employee of the Company (except (1) for renewals or replacements (including employees hired to replace similarly situated employees) of existing agreements with current employees (other than officers) upon expiration of the term of the applicable agreement on substantially the same terms as the previous agreement or (2) for severance agreements entered into with employees (other than officers) in the ordinary course of business consistent with past practice in connection with terminations of employment); (D) except as permitted pursuant to clause (C) above, establish, adopt, enter into or amend any Company Subsidiary shall agreeBenefit Plan, collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former (x) directors or officers, except as required to comply with Section 409A of the Code or other applicable Law or (y) except in the ordinary course of business consistent with past practice and as would not result in the aggregate in a material increase in cost to the Company or as is required to comply with Section 409A of the Code or other applicable Law, other employees or independent contractors or any of their beneficiaries; or (E) amend or waive any performance or vesting criteria or accelerate vesting, exercisability, distribution, settlement or funding under any Company Benefit Plan;
(viii) other than (x) settlement of claims, liabilities or obligations in connection with any stockholder litigation against the Company and/or its officers, directors, employees and Representatives relating to this Agreement, the Merger and/or the transactions contemplated by this Agreement involving monetary payment only in an amount not to exceed $1,500,000 in the aggregate and for which a full release is granted to the Company, Parent and their respective officers, directors, employees and Representatives in connection therewith, or (y) settlements and waivers of rights in the ordinary course of business consistent with past practice in connection with the processing and paying of claims to Providers, (A) settle, offer or propose to settle, or compromise any material claim or Proceeding or (B) enter into any consent decree, injunction or similar restraint or form of equitable relief that would materially restrict the operations of the business of the Company and its Subsidiaries taken as a whole after the Effective Time;
(A) except in the ordinary course of business consistent with past practice, enter into, modify, amend or terminate any Company Material Contract, in writing each case in a manner that would be material and adverse to the Company and its Subsidiaries, taken as a whole or otherwise(B) without limitation of the foregoing clause (A), enter into any Company Material Contract (or any extension thereof) with a term of three (3) years or more;
(x) alter or amend in any material respect any existing accounting methods, principles or practices, except as may be required by GAAP, Applicable SAP or applicable Law;
(xi) make any change in the investment, hedging, reserving, underwriting or claims administration policies, practices or principles that would be material to the Company and its Subsidiaries, taken as a whole, except as may be required to conform to changes in GAAP, Applicable SAP or applicable Law;
(xii) make or change any material Tax election, change any annual Tax accounting period, adopt or change any material method of tax accounting, file any material amended Tax Returns or claims for material Tax refunds, enter into any material closing agreement, surrender any material Tax claim, audit or assessment, surrender any right to claim a material Tax refund, offset or other reduction in Tax liability, consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment, except, with respect to settlement or surrender of any material Tax claims or assessments, to the extent of reserves established on the consolidated balance sheet of the Company as reflected in the most recent Company SEC Financial Statement;
(xiii) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;
(xiv) contract with or employ any person or entity listed on the GSA Excluded Parties List System (EPLS), the OIG List of Excluded Individuals/Entities (LEIE) or any FDA Debarment List; or
(xv) obligate itself to take any of the actions prohibited by foregoing actions.
(c) The Company and each of its Subsidiaries shall establish or cause to be established in accordance with GAAP on or before the foregoing clauses (a) through (s)Effective Time an adequate accrual for all material Taxes due with respect to any period or portion thereof ending prior to or as of the Effective Time.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company agrees that it shall, and shall cause each Company Subsidiary to, between the date of this Agreement and the Closing or the earlier termination of this Agreement, except (1) as may be required or expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 6.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), or (4) for any actions taken reasonably and in good faith to respond to COVID-19 Measures or Emergency Actions (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (4), the Company shall use commercially reasonable efforts to provide advance notice to and consult with SPAC (if reasonably practicable) prior to taking such actions), unless SPAC shall otherwise consent in writing (which consent shall not be unreasonably conditioned, withheld or delayed); provided that SPAC shall be deemed to have consented in writing if it provides no response within five (5) Business Days after the Company has made a request for such consent in writing:
(i) conduct its their business only in the ordinary course and in Ordinary Course; and
(ii) use its reasonable best efforts to preserve substantially intact the same manner as heretofore conducted since December 31, 1999, business organization of the Company and the Company Subsidiaries, to keep available the services of the current officers, key employees, service partners and each consultants of the Company Subsidiary shall use all reasonable efforts and the Company Subsidiaries, to preserve intact its present business organization the current relationships of the Company and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment the Company Subsidiaries with customers, brokers, suppliers and other Persons with which the Company or any Company Subsidiary has significant business relations, and to maintain in effect all others having business dealings Permits and Insurance Policies (in such amounts and with it;such deductibles as are currently maintained).
(b) Except Seller shall, between the date of this Agreement and the Closing or the earlier termination of this Agreement, except (1) as may be required or expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 6.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), or (4) for any actions taken reasonably and in good faith to respond to COVID-19 Measures or Emergency Actions (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (4), Seller shall use commercially reasonable efforts to provide advance notice to and consult with SPAC (if reasonably practicable) prior to taking such actions), unless SPAC shall otherwise consent in writing (which consent shall not be unreasonably conditioned, withheld or delayed, provided that SPAC shall be deemed to have consented in writing if it provides no response within five (5) Business Days after the Company has made a request for such consent in writing), conduct its business in the Ordinary Course solely as it relates to the business of the Company and the Company Subsidiaries, including by making capital contributions or loans to the Company and the Company Subsidiaries to sufficiently fund the operations of the Company and the Company Subsidiaries consistent with past practice (without regard to any limitations, as to amount or timing, set forth in that certain Current Account Agreement between the Company and Engie Treasury Management S.à X.x., dated September 9, 2020).
(c) By way of amplification and not limitation, except (1) as may be required or expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 6.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), and (4) for any actions taken reasonably and in good faith to respond to COVID-19 Measures or Emergency Actions (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (4), the Company shall use commercially reasonable efforts to provide advance notice to and consult with SPAC (if reasonably practicable), prior to taking such actions), the Company shall not, and the Company shall cause each Company Subsidiary not to, between the date of this Agreement and the Closing or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of SPAC (which consent shall not permit any Company Subsidiary tobe unreasonably conditioned, make withheld or propose delayed), provided that SPAC shall be deemed to make any change have consented in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and writing if it provides no response within five (5) Business Days after the Company agrees that it will notify Parent and provide Parent with information has made a request for such consent in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;writing:
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur otherwise change any individual Liability or series organizational documents of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fii) Except (x) as set forth in issue, sell, pledge, dispose of, grant or encumber, or authorize the Company Disclosure Scheduleissuance, sale, pledge, disposition, grant or encumbrance of, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (iA) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock Equity Interests of the Company or any Company Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any Equity Interest (including, without limitation, any phantom interest), of the Company or any Company Subsidiary, except for any capital injections made by Seller under Section 6.01(b); andor (B) any material assets of the Company or any Company Subsidiary;
(tiii) Neither 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;
(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 Equity Interests;
(v) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its Equity Interests;
(vi) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or substantially all of the assets or any other business combination) any corporation, partnership, other business organization or any division thereof; (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 intentionally grant any security interest in any of its assets, except for any loans made by Seller under Section 6.01(b) which will be cancelled at or prior to Closing in accordance with the terms of this Agreement; or (C) merge, consolidate, combine or amalgamate with any Person or authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution or winding-up;
(vii) other than in the Ordinary Course, (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 any new (except as permitted under clause (vii)), or materially amend any existing, employment, retention, bonus, change in 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) establish or become obligated under any collective bargaining agreement or other contract or agreement with a labor union, trade union, works council, or other representative of employees; (E) hire any new employees holding an executive position (i.e., ‘C-level’ employees); or (F) terminate the employment or service of any employee other than any such termination for cause;
(viii) adopt, amend and/or terminate any material Plan except as may be required by applicable Law, or is necessary in order to consummate the Transactions, or health and welfare plan renewals in the Ordinary Course;
(ix) materially amend other than reasonable and usual amendments in the Ordinary Course, with respect to accounting policies or procedures, other than as required by GAAP or applicable Local GAAP;
(x) other than in the Ordinary Course, (A) amend any material Tax Return, (B) take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of materially increasing the Tax liability or materially reducing any Tax asset of Dutch Holdco, SPAC or New SPAC in respect of any post-closing Tax period, (C) change any material method of Tax accounting, (D) make, change or rescind any material election relating to Taxes, or (E) settle or compromise any material U.S. federal, state, local or non-U.S. Tax audit, assessment, Tax claim or other controversy relating to Taxes;
(xi) (A) 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, 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;
(xii) fail to maintain the existence of, or use reasonable efforts to protect, Company-Owned IP;
(xiii) other than in the Ordinary Course, enter into any contract, agreement or arrangement that obligates the Company nor or any Company Subsidiary shall agreeto develop any Intellectual Property related to the business of the Company or the Products;
(xiv) intentionally permit any material item of Company-Owned IP to lapse or to be abandoned, invalidated, dedicated to the public, or disclaimed, or otherwise become unenforceable or fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and Taxes required or advisable to maintain and protect its interest in writing each and every material item of Company-Owned IP;
(xv) waive, release, assign, settle or otherwisecompromise any Action, other than waivers, releases, assignments, settlements or compromises that are solely monetary in nature and do not exceed $100,000 individually or $500,000 in the aggregate; or
(xvi) enter into any formal or informal agreement or otherwise make a binding commitment to take do any of the actions prohibited by foregoing. Nothing herein shall require the Company to obtain consent from SPAC to do any of the foregoing clauses (a) through (s)if obtaining such consent might reasonably be expected to violate applicable Law, and nothing contained in this Section 6.01 shall give to SPAC, directly or indirectly, the right to control or direct the ordinary course of business operations of the Company or any of the Company Subsidiaries prior to the Closing Date. Prior to the Closing Date, each of SPAC and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its respective operations, as required by Law.
Appears in 1 contract
Samples: Business Combination Agreement (TPG Pace Beneficial Finance Corp.)
Conduct of Business by the Company. The Company covenants and agrees as Pending the Merger. Prior to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent or Acquisition Sub shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, writing or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure ScheduleAgreement:
(a) The the business of the Company shall, and shall cause each Company Subsidiary to, conduct its business be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itcourse;
(b) Except as contemplated by this Agreement, the Company shall notnot (i) directly or indirectly redeem, and shall not permit purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its Certificate of Incorporation or By-laws; or (iii) split, combine or reclassify the outstanding Company Subsidiary toCommon Stock or declare, make set aside or propose to pay any dividend payable in cash, stock or property or make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in distribution with respect to any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringsuch stock;
(c) The the Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter issue or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to issue any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the additional Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)Common Stock, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall notoptions, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, warrants or rights of any kind to acquire any shares of Company Common Stock; (ii) acquire or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares dispose of any capital stock fixed assets or acquire or dispose of or any other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) substantial assets other than in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, business; (iii) increase in incur additional Indebtedness or any manner the compensation of, other liabilities or enter into any contract relating to other transaction other than in the borrowing ordinary course of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, business; (iv) increase by more than 5% enter into any contract, agreement, commitment or arrangement with respect to any of the aggregate number of its employees, foregoing; or (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or except as contemplated by this Agreement, enter intointo any contract, adopt agreement, commitment or increase any indemnification arrangement to dissolve, merge, consolidate or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or enter into any other Personmaterial business combination;
(gd) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for use its best efforts to preserve intact the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition organization of the Company, any Company Subsidiaryto keep available the service of its present officers and key employees, or and to preserve the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case good will of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance those having business relationships with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportit;
(je) The the Company agrees that it shall will not, nor shall will it authorize any director or authorize or permit any Company Subsidiary officer or employee or any attorney, accountant or other representative retained by it to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary coursemake, consistent solicit, encourage any inquiries with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary respect to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim engage in any actionnegotiations concerning, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling Acquisition Proposal (as defined below). The Company will promptly advise Parent orally and in writing of any such inquiries or proposals (or requests for information) and the substance thereof. As used in this paragraph, settlement “Acquisition Proposal” shall mean any proposal for a merger or compromise other business combination involving the Company or for the acquisition of a substantial equity interest in it or any material assets of it other than as contemplated by this Agreement. The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any person conducted heretofore with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiaryforegoing; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Samples: Merger Agreement (Spatializer Audio Laboratories Inc)
Conduct of Business by the Company. The Company covenants (a) From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless if any, on which this Agreement is earlier terminated pursuant to Section 8.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) as may be agreed in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise expressly permitted may be contemplated or contemplated required by this Agreement or (iv) as set forth on in Section 6.1(a) of the Company Disclosure Schedule:
(a) The , the Company shallcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and that such entities shall cause each Company Subsidiary tonot take any action except in, conduct its business only in the ordinary course of business consistent with past practice and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all their reasonable best efforts to preserve intact its their present business organization material lines of business, maintain their rights and franchises and preserve its regular services to, their relationships with material customers and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having other Persons with whom the Company or any of its Subsidiaries has significant business dealings relations; provided, however, that no action by the Company or its Subsidiaries with it;respect to matters specifically addressed by any provision of Section 6.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except as The Company agrees, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned, other than a consent with respect to the matters contemplated by this Agreementclauses (i) through (vi), which may be withheld by Parent in its sole discretion), except as may be required by applicable Law or as set forth in Section 6.1(b) of the Company Disclosure Schedule, the Company shall not, and shall cause its Subsidiaries not permit to:
(i) amend the certificate of incorporation or by-laws or similar applicable charter documents of the Company or amend the charter documents of any Subsidiary of the Company;
(ii) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock, except for pro rata dividends or other distributions made by any direct or indirect Subsidiary of the Company to the Company or one of its wholly-owned Subsidiaries;
(iii) split, combine, subdivide or reclassify any shares of 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 capital stock;
(iv) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock or other ownership interest in the Company or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable or unexercised options or warrants outstanding on the date hereof), other than (A) issuances of shares of Company Common Stock in respect of any exercise of any Company Subsidiary Stock Option, Company RSU or Company Warrant to the extent disclosed on Section 4.2(a) of the Company Disclosure Schedule, or (B) as described on Section 6.1(b)(iv) of the Company Disclosure Schedule;
(v) directly or indirectly purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any rights, warrants or options to acquire any such shares, except for the purchase or sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock or other Company Stock Options, Company RSUs or Company Warrants outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 6.1(b) if necessary to effectuate an option direction upon exercise or for withholding of Taxes;
(vi) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, or enter into a letter of intent or agreement in principle with respect thereto;
(vii) except as otherwise permitted or contemplated by this Agreement or for transactions between the Company and its Subsidiaries or among the Company’s Subsidiaries, prepay, redeem, repurchase, defease, cancel or otherwise acquire any Indebtedness or guarantees thereof of the Company or any of its Subsidiaries, other than (A) at stated maturity, or (B) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to which holders of such Indebtedness or guarantees thereof may be entitled);
(viii) incur, assume, guarantee or otherwise become liable for any Indebtedness, except for borrowings pursuant to Company Material Contracts disclosed on Section 4.19(a) of the Company Disclosure Schedule;
(ix) change or revoke any material Tax election, change an annual Tax accounting period, change any material Tax accounting method, file any material amended Tax Return, enter into any closing agreement with respect to a material amount of Taxes, settle any material Tax claim or assessment or surrender any right to claim a refund of a material amount of Taxes;
(x) enter into any new line of business outside of the existing business of the Company and its Subsidiaries;
(xi) make any acquisition of any other person or business or make any loans, advances or capital contributions to, make or propose investments in, any other person (other than any Subsidiary of the Company);
(xii) commit to or make any change capital expenditures in its dividend practices or policies or excess of $150,000 in its underwritingthe aggregate, pricing, claims, risk retention, investment, reinsurance practices or policies except for (A) capital expenditures disclosed in any material respect; and Section 6.1(b)(xii) of the Company agrees that it will notify Parent and provide Parent with information Disclosure Schedule or (B) capital expenditures made in reasonable detail regarding response to any material transactions emergency, whether caused by war, terrorism, weather events, public health events, outages or otherwise;
(excluding investment transactions xiii) except as required by the terms of the Company Benefit Plans as in effect on the date hereof, (A) except in the ordinary course of business consistent with past practicepractice for any employee who is not an executive officer, but increase the compensation or other benefits (including transactions involving the securitization of Assets of the Company or granting of any Company Subsidiary and transactions involving derivative securities)discretionary bonuses) payable or provided to the Company’s directors, whether involving a officers or employees, (B) enter into, adopt, amend, modify (including the acceleration of vesting) or terminate any bonus, profit sharing, incentive, compensation, severance, retention, termination, option, appreciation right, performance unit, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or saleother employee benefit agreement, that it trust, plan, fund or other arrangement for the compensation, benefit or welfare of any Company Subsidiary is seriously consideringdirector, officer or employee in any manner, or (C) enter into or amend any collective bargaining agreements or similar contracts;
(cxiv) The Company shall not enter into or make any material change in accounting methods loans or practicesadvances to any of its officers, including without limitation any change with respect to establishment of reserves for unearned premiumsdirectors, losses employees, agents or consultants (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than reimbursements or advances of business expense in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree practice to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability employees of the Company or any of its Subsidiaries) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person Benefit Plan;
(xv) materially change financial accounting policies or in any location procedures or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement methods of reporting income, deductions or other material items for financial accounting purposes, except as required by a change in GAAP, SEC rule or policy or applicable Law;
(as defined belowxvi) (A) sell, lease, license, transfer, exchange or swap, mortgage (including securitizations), or (x) modify any contract with respect to the subject otherwise dispose of any of the foregoing clauses;
(e) The Company shall notmaterial properties or non-cash assets, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, including the capital stock of or other equity interests in or any securities convertible into shares Subsidiaries, except for sales of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) inventory in the ordinary course of business consistent with past practice, or (zB) as required by the terms create or incur any Lien on any of agreements its material assets or plans already in effect or Applicable Lawproperties, the other than Company shall not, and shall not permit any Company Subsidiary to Permitted Liens;
(i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (iixvii) enter into or materially amend any severance contract, (iii) increase agreement that would result in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party Company or any of its Subsidiaries becoming subject to any restriction not in existence on the date hereof with respect to the payment of distributions or any other Persondividends;
(gxviii) Other modify, amend or terminate, or waive or assign any rights under, any Company Material Contract or material Company Real Property Lease other than in the ordinary course of business consistent with past practice, the Company shall not, and shall a manner that is not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets whichmaterial, individually or in the aggregate, are material and adverse to the financial condition of the Company, any Company Subsidiary, or the Company and its Subsidiaries, or that could prevent or materially delay the consummation of the Merger or the other transactions contemplated by this Agreement past the End Date (or any extension thereof);
(xix) waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that, with respect to the payment of monetary damages, involve only the payment of monetary damages (A) equal to or less than the amounts specifically reserved with respect thereto on the balance sheet as of December 31, 2014 included in the Company SEC Documents or (B) that do not exceed $150,000 in the aggregate;
(xx) implement any plant closings or layoff of employees that would reasonably be expected to materially and adversely impact the business and/or operations of the Company and its Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;or
(jxxi) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring agree or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agreecommit, in writing or otherwise, to take any of the actions prohibited foregoing actions.
(c) The Company shall promptly notify Parent of any change, occurrence, effect, condition, fact, event, or circumstance of which any of the Company’s executive officers has actual knowledge which would reasonably be expected to cause the failure of any of the conditions set forth in Article VII to be satisfied, including any breach of a representation, warranty, covenant or agreement contained in this Agreement by the foregoing clauses (aCompany of which any the Company’s executive officers has actual knowledge and which, if not timely cured, would reasonably be expected to cause the failure of any of the conditions set forth in Article VII to be satisfied; provided, however, that the delivery of any notice by the Company pursuant to this Section 6.1(c) through (s)shall not limit or otherwise affect the respective rights, obligations, representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement, or be deemed to amend or supplement the Company Disclosure Schedule or constitute an exception to any representation, warranty, covenant or agreement.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants During the period ---------------------------------- between the date hereof and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall except as may otherwise consent be consented to in writing, writing by the other parties hereto (which consent shall not be unreasonably withheld, ) or as otherwise may be expressly permitted or contemplated by pursuant to this Agreement or as set forth on in Section 5.1 of the Company Disclosure Schedule:
(a) The , as applicable, the Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct its business only operations in the ordinary and usual course and in substantially the same manner of business as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve goodwill in all material respects, keep available the services of its regular services toofficers and employees as a group, subject to changes in the ordinary course, and maintain its satisfactory relationships withwith suppliers, policyholdersdistributors, insurers, reinsurers, agents, sales customers and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings relationships with it;
(b) Except . Without limiting the generality of the foregoing, unless in each case in receipt of a consent as contemplated by this Agreement, set forth above the Company shall not, and shall cause its Subsidiaries not permit to:
(a) authorize, declare, set aside or pay any Company Subsidiary to, make dividends on or propose to make any change in distribution with respect to its dividend practices or policies or in its underwritingoutstanding shares of stock, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and except that wholly owned Subsidiaries of the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions may pay dividends on or make distributions of cash to the Company or another wholly owned Subsidiary of the Company;
(excluding investment transactions b) except in the ordinary course of business consistent with past practice, but including transactions involving enter into or amend any employment, severance or similar agreements or arrangements with, or grant any bonus or salary increases or otherwise increase the securitization compensation or benefits provided to, any of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringtheir respective employees;
(c) The Company shall not make any material change in accounting methods except as expressly permitted by Section 5.8, authorize or practicespublicly announce an intention to authorize, including without limitation any change or enter into an agreement with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesto, or take any change in depreciation action to consummate any agreement or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;arrangement with respect to:
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter any merger, consolidation or by-laws business combination (unless contemplated herebyother than the Merger), ,
(ii) incur any individual Liability liquidation, dissolution, restructuring, recapitalization or series other reorganization or
(iii) any acquisition or disposition of related Liabilities in excess a material amount of $200,000 assets (other than purchases and sales of raw materials, supplies, inventory, products or services in the ordinary course of business consistent with past practice) or securities, (iii) incur or any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess release or relinquishment of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into rights under any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesmaterial Contracts;
(ed) The Company shall not, nor shall it permit propose or adopt any Company Subsidiary to, issue amendments to its certificate of incorporation or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiarybylaws;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and Pending the Closing. Except for matters set forth in Section 5.01 of the Company Subsidiaries thatDisclosure Letter or otherwise expressly permitted by this Agreement (or as required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company), at all times up from the date of this Agreement to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, (i) conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving and (ii) use commercially reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the securitization services of Assets their respective present officers, key employees and key independent contractors, and preserve the goodwill and business relationships with customers, suppliers, licensors, licensees and others having business relationships with them. In addition, and without limiting the generality of the foregoing, except for matters set forth in Section 5.01 of the Company Disclosure Letter or otherwise expressly permitted by this Agreement, from the date of any Company Subsidiary and transactions involving derivative securities)this Agreement to the Effective Time, whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The the Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as unless required by Applicable Law, GAAP applicable Law or SAP;
(d) The Company shall notthe regulations or requirements of any stock exchange or regulatory organization applicable to the Company), and shall not permit any of its Subsidiaries to, do any of the following without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed:
(a) (i) amend or propose to amend the Company's certificate of incorporation or bylaws or similar governing documents, or materially amend or propose to materially amend any of the Company's Subsidiaries' certificate of incorporation or bylaws or similar governing documents, (ii) split, combine or reclassify their outstanding capital stock or issue or authorize the issuance of any other security in respect or, in lieu of, or in substitution for, share of its capital stock, (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends or distributions to the Company or any of its Subsidiaries by a Subsidiary toof the Company, (iv) merge or consolidate with any Person (other than a merger among wholly-owned Subsidiaries of the Company or a merger between the Company and its wholly-owned Subsidiaries), or (v) enter into any agreement with respect to the voting of its capital stock or other securities held by the Company or any of its Subsidiaries;
(b) issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any 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 of Company Common Stock (A) upon the exercise of Company Purchase Rights outstanding on the date hereof or hereafter granted in accordance with the provisions of subclause (iv) of this clause (b), (B) upon exercise of Company Stock Options outstanding on the date hereof or hereafter granted in accordance with the provisions of subclause (ii) or (iii) of this clause (b) or (C) in accordance with the terms of the Company Rights Agreement as in effect on the date hereof, (ii) the Company may grant Company Stock Options to purchase up to an aggregate of 100,000 shares of Company Common Stock to new employees of the Company or its Subsidiaries in accordance with the terms of the Company Stock Plans consistent with past practice and with an exercise price per share of Company Common Stock no less than the fair market value of a share of Company Common Stock on the date of grant, provided that the vesting of such options does not accelerate as a result of the Merger or the transactions contemplated by this Agreement and provided, further, that no such grant to purchase more than 25,000 shares of Company Common Stock shall be made to any individual, (iii) the Company may grant Company Stock Options pursuant to existing contractual relationships as set forth in Section 5.01(b) of the Company Disclosure Letter, (iv) the Company may grant Company Purchase Rights in accordance with the terms of the Company ESPP (as in effect on the date hereof), subject to Section 2.07, (v) the Company may grant up to an aggregate of 10,000 shares of Company Restricted Stock to new employees of the Company or its Subsidiaries in accordance with the terms of the Company Restricted Stock Plan consistent with past practice, provided that the vesting of such shares does not accelerate as a result of the Merger or the transactions contemplated by this Agreement and provided, further, that no such grant to purchase more than 1,000 shares of Company Common Stock shall be made to any individual, and (vi) transactions exclusively among the Company and its Subsidiaries shall be permitted;
(c) except for transactions exclusively among the Company and its Subsidiaries, (i) amend issue any debt securities, incur, guarantee or otherwise become contingently liable with respect to any indebtedness for borrowed money, or enter into any arrangement having the economic effect of any of the foregoing (other than in connection with accounts payable in the ordinary course of business or borrowings under the existing credit facilities of the Company or any of its charter or by-laws (unless contemplated herebySubsidiaries), (ii) incur make any individual Liability loans, advances or capital contributions to, or investments in, any Person, (iii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stock or any options, warrants or rights to acquire any of its capital stock or any security convertible into or exchangeable for its capital stock other than in connection with the exercise of outstanding Company Stock Options pursuant to the terms of the Company Stock Plans and the relevant written agreements evidencing the grant of Company Stock Options and repurchases of outstanding shares of Company Restricted Stock pursuant to the terms of the Company Restricted Stock Plan, (iv) make any material acquisition of any assets or businesses (including by merger, consolidation, acquisition of stock or assets, in-bound license transactions or otherwise) other than acquisitions the fair market value of the total consideration (including license, royalty or other fees) for which does not exceed, individually, $2,000,000 or, in the aggregate, $5,000,000 (provided that any such acquisition does not adversely affect the ability of Parent and the Company to obtain applicable approvals under the Antitrust Laws), or (v) sell, pledge, assign, dispose of, transfer, lease, securitize or materially encumber any businesses or assets that are material to the Company and its Subsidiaries, taken as a whole (excluding Intellectual Property, which is addressed in Section 5.01(d)) other than (A) sales of inventory and other assets in the ordinary course of business, (B) sales or dispositions of assets in one or a series of related Liabilities transactions having an aggregate value of $3,000,000 or less, and (C) divestitures pursuant to Section 5.11;
(i) sell, pledge, assign, dispose of, transfer, securitize, lease or materially encumber any material Company Owned Intellectual Property or material Company Licensed Intellectual Property, or (ii) except in the ordinary course of business, as reasonably prudent to the conduct of the business or as provided for in Company Material Contracts in effect as of the date hereof, (A) exclusively license, abandon or fail to maintain any material Company Owned Intellectual Property or material Company Licensed Intellectual Property, (B) grant, extend, amend (except as required in the diligent prosecution of the material Company Owned Intellectual Property), waive or modify any rights in or to any material Company Owned Intellectual Property or material Company Licensed Intellectual Property, (C) fail to diligently prosecute the Company's and its Subsidiaries' material patent applications, or (D) fail to exercise a right of renewal or extension under any Company Material License;
(i) enter into any Contract or arrangement that materially limits or otherwise materially restricts the Company or any of its Subsidiaries or any of their respective affiliates or any successor thereto from engaging or competing in any line of business or in any geographic area, (ii) vary its inventory practices in any material respect from its past practices, except as required by GAAP or by Law, or (iii) make any capital expenditure or expenditures (including leases and in-bound licenses) in the aggregate in excess of $200,000 the aggregate amount set forth in the Company's budget provided to Parent prior to the date hereof (other than capital expenditures for unbudgeted repairs and maintenance in the ordinary course of business consistent with past practice);
(f) grant, (iii) incur enter into or amend any indebtedness for money borrowed employment, severance, change in the aggregate for the Company and the Company Subsidiaries in excess control, special pay arrangement with respect to termination of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement employment or other similar reorganizationarrangements or Contract with any directors, arrangement officers or business combinationemployees of the Company or its Subsidiaries, other than a Superior Acquisition Proposal as permitted hereinexcept (i) pursuant to previously existing Contractual arrangements or policies between such current directors, officers or employees and the Company, (vii) prior pursuant to notifying Parent, enter employment agreements entered into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents a Person who is not already an officer of the Company in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of and is hired or promoted by the Company or one of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to its Subsidiaries after the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than date hereof in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing minimum extent necessary to comply with Section 409A of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect Code without increasing the benefits provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall notincrease the salary, and shall not permit benefits or monetary compensation of any Company Subsidiary todirectors, other than pursuant to the operation of separate accounts executive officers or employees, except (A) for increases in the ordinary course of business, consistent with (B) pursuant to previously existing strategiesContractual arrangements, (iC) sellin connection with the assumption by such employee of new or additional responsibilities or (D) to respond to offers of employment made by other Persons, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructureestablish, amendadopt, modify enter into, or otherwise affect any Investment Asset materially amend any, collective bargaining agreement or any contract relating thereto which is material bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination or severance plan, arrangement, trust, fund, policy or agreement, except to the financial condition minimum extent necessary to comply with Section 409A of the Company, Code without increasing the benefits provided to any Company Subsidiary, Person or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses otherwise required by any other applicable Law;
(i) and (ii)accelerate, only amend or change the period of exercisability or vesting of options, restricted stock or similar awards under any Company Stock Plan, except to the minimum extent necessary in accordance order to comply with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets Section 409A of the Company Code without accelerating the exercisability or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization vesting of any gross capital loss or losses in an amount of $250,000 or more such award, or (ii) an adverse impact on the surplus authorize cash payments in exchange for any options granted under any of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment such plans except as required by the Company terms of such plans or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract related agreements in effect on the date as of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(qi) The Company shall notwaive, nor shall the Company permit release, assign, settle or compromise any Company Subsidiary tomaterial claims, take or any actions material litigation or arbitration;
(j) take, or agree to take, any action that would be reasonably likely to adversely affect the status of prevent the Merger from qualifying as a reorganization under with the meaning of Section 368 368(a) of the Code;
(rk) Neither the Company nor adopt, enter into, or amend any Company Subsidiary shall Benefit Plan to materially increase the benefits, Liability, or obligations of any Company Benefit Plan or to accelerate the payment of benefits under any Company Benefit Plan, except (i) make as involves any such then existing plans, agreements, trusts, funds or rescind arrangements of any material express company acquired after the date hereof as permitted by this Agreement; or deemed election relating to Taxes, (ii) as required pursuant to existing Contractual arrangements or this Agreement;
(l) change any method or principle of financial accounting in a manner that is inconsistent with past practice, except to the extent required by GAAP as advised by the Company's regular independent accountants;
(m) make any material Tax election or settle or compromise any material Tax liability or refund, or change any annual Tax accounting period or material method of Tax accounting, file any material amendment to a request for a tax ruling or Tax Return, enter into any closing agreement relating to any material Tax, surrender any right to claim a material Tax Ruling refund, or consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment, in each case, other than as required by Law;
(as defined below)n) modify, settlement amend or compromise terminate, or waive, release or assign any material rights or claims with respect to any material Tax matterconfidentiality or standstill agreement to which the Company is a party and which relates to a business combination or other similar extraordinary transaction;
(o) take any action to render inapplicable, or to exempt any third Person from, (i) the provisions of Section 203 of the DGCL, or (iiiii) with respect any other state takeover or similar Law or state Law that purports to any material Tax matter, change any of its methods of reporting income limit or deductions for federal income tax purposes from those employed in restrict business combinations or the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Lawability to acquire or vote shares;
(sp) Other than take any action that is intended or would reasonably be expected to result in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of conditions to the Company or any Company SubsidiaryMerger in Article VI not being satisfied; andor
(tq) Neither the Company nor any Company Subsidiary shall agree, in writing authorize or otherwise, otherwise to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless Parent shall otherwise if any, on which this Agreement is earlier terminated pursuant to Section 6.1 (the "Termination Date"), and except with the prior written consent in writing, of the Bidder (which consent shall will not be unreasonably withheldwithheld or delayed), or as otherwise expressly permitted or contemplated by this Agreement or as set forth on in Section 4.1 of the Company Disclosure ScheduleSchedule or as may be expressly permitted pursuant to this Agreement, the Company:
(a1) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct its operations according to their ordinary and usual course of business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999consistent with past practice;
(2) shall use its reasonable best efforts, and the Company and cause each Company Subsidiary shall of its Subsidiaries to use all its reasonable efforts best efforts, to preserve intact its present business organization and goodwill, keep available the services of its current officers and other key employees and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others with those Persons having material business dealings with itthe Company and its Subsidiaries;
(b3) Except as contemplated shall not, and shall not permit its Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (other than any dividends or distribution by this Agreement, a wholly owned Subsidiary of the Company to the Company or any of its wholly owned Subsidiaries);
(4) shall not, and shall not permit any Company Subsidiary toof its Subsidiaries to establish, make enter into or propose to make amend any change in its dividend practices severance plan, agreement or policies arrangement or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and Plan of the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding or increase the compensation payable or to become payable or the benefits provided to its officers, directors or employees, other than as contemplated by law or any material transactions (excluding investment transactions existing contract, employee benefit or welfare plan or policy, or in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets practice (1) with respect to employees who are not officers of the Company or of any Company Subsidiary Company, and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering(2) with respect to annual bonuses and other incentive awards for employees including officers;
(c5) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any of its Subsidiaries to, authorize, or announce an intention to authorize, or enter into an agreement with respect to, any merger, consolidation or business combination, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or securities or any other similar extraordinary transaction;
(6) shall not, and shall not permit any of its Subsidiaries to, propose or adopt any amendments to its certificate of incorporation or bylaws (or other similar organizational documents);
(7) shall not, and shall not permit any of its Subsidiaries to, issue or authorize the issuance of, or agree to issue or sell any shares of capital stock of any class (whether through the issuance or granting of options, warrants, commitments, convertible securities, subscriptions, rights to purchase or otherwise), except for (1) the issuance of Life Technologies Common Stock pursuant to options and grants outstanding as of the date hereof under the Company's 1997 Long-Term Incentive Plan, 1996 Non-Employee Directors Stock Option Plan, 1995 Long-Term Incentive Plan and 1991 Stock Option Plan (each such plan, a "Company Subsidiary Equity Plan") or (2) options and other equity awards granted in the ordinary course of business consistent with past practice to any new employee hired after the date hereof but before the Closing Date or pursuant to formula awards, in either case under a Company Equity Plan;
(8) shall not, and shall not permit any of its Subsidiaries to, reclassify, combine, split, purchase or redeem any shares of its capital stock or purchase or redeem any rights, warrants or options to acquire any such shares;
(9) shall not, and shall not permit any of its Subsidiaries to, (iA) amend incur, assume or prepay any indebtedness or any other liabilities for borrowed money or issue any debt securities other than incurrences and repayments of indebtedness under the Company's or its charter Subsidiaries' credit facilities in existence on the date of this Agreement, or by-laws (unless contemplated herebyB) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person (other than wholly owned Subsidiaries), except for guarantees by Subsidiaries of the Company indebtedness permitted under the preceding clause (iiA);
(10) incur shall not, and shall not permit any individual Liability of its Subsidiaries to (or series consent to any proposal by any Person in which the Company has an investment to), make or forgive any loans, advances or capital contributions to, or investments in, any other Person other than the Company or any wholly owned Subsidiary of related Liabilities the Company (including any intercompany loans, advances or capital contributions to, or investments in, any affiliate) other than advances to employees in excess the ordinary course of $200,000 business in accordance with the Company's or its Subsidiaries' established policies;
(11) shall not, and shall not permit any of its Subsidiaries to, (A) enter into any material lease, license, contract or agreement or otherwise subject to any material Lien any of its properties or assets (including securitizations), other than in the ordinary course of business consistent with past practice; (B) modify, amend in any material respect, or terminate any of its material contracts; (iiiC) incur waive, release or assign any indebtedness for money borrowed in the aggregate for rights that are material to the Company and the Company its Subsidiaries in excess of $200,000 for taken as a whole; or (D) permit any such indebtedness having insurance policy naming it as a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all beneficiary or a substantial portion of its Assetsloss payable payee to lapse, bulk be cancelled or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than expire unless a Superior Acquisition Proposal new policy with substantially identical coverage is in effect as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company date of lapse, cancellation or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesexpiration;
(e12) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries to, change any of the financial accounting methods or any other Personpractices used by it unless required by GAAP;
(g13) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make any capital expenditures Tax election that, individually or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as aggregate, is reasonably likely to have a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which Material Adverse Effect on the Company or settle or compromise any Company Subsidiary is a partymaterial Tax liability;
(h14) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive take any rights with action that would prevent the Merger from qualifying as a value in excess reorganization within the meaning of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, Section 368(a) of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;Code; and
(i15) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the foregoing actions prohibited by or take any action which would result in any of the foregoing clauses (a) through (s)conditions to the Merger set forth in Article V hereof not being satisfied.
Appears in 1 contract
Samples: Merger Agreement (Invitrogen Corp)
Conduct of Business by the Company. The Company covenants and agrees as During the period from the date of this Merger Agreement to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime of the Merger (except as otherwise expressly contemplated by the terms of this Merger Agreement or as may be required in preparation for or in contemplation of the transactions contemplated by this Merger Agreement), unless Parent shall otherwise consent in writingand except as approved by Parent, which consent approval shall not be unreasonably withheld, withheld or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreementdelayed, the Company shall not, act and shall not permit any Company Subsidiary to, make or propose to make any change in carry on its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions business in the ordinary course of business consistent with past practicepractice and use its best efforts to preserve substantially intact its current business organization, but including transactions involving keep available the securitization services of Assets its current officers and employees and preserve its relationships with customers, suppliers, licensors, licensees, and others having significant business dealings with it. Without limiting the generality of the foregoing, during the period from the date of this Merger Agreement to the Effective Time of the Merger, the Company shall not:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock or (B) split, combine or reclassify any capital stock of the Company or issue or authorize the issuance of any Company Subsidiary and transactions involving derivative securities)other securities in respect of, whether involving a purchase in lieu of or sale, that it or any Company Subsidiary is seriously consideringin substitution for shares of capital stock of the Company;
(cii) The Company shall not make any material change in accounting methods amend its Certificate or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPBy-laws;
(diii) The Company shall notacquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or any corporation, limited liability company, partnership, joint venture, association or other business organization or division thereof;
(iv) sell, lease, license, mortgage or otherwise encumber or subject to any Lien (other than Permitted Liens) or otherwise dispose of any of its properties or assets other than any such properties or assets the value of which do not exceed $5,000 individually and shall not permit any Company Subsidiary to, $10,000 in the aggregate;
(iv) amend its charter or by-laws (unless contemplated hereby), (iiA) incur any individual Liability indebtedness for borrowed money (excluding additional advances for working capital purposes under the Company’s existing line of credit with Silicon Valley Bank, provided that the outstanding principal balance on such line of credit shall not exceed $500,000) or series guarantee any such indebtedness of related Liabilities in excess another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of $200,000 the Company, 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 or (B) make any loans, advances or capital contributions to, or investments in, any other person;
(vi) (A) acquire or lease, or agree to acquire or lease, any assets, other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed practice not to exceed $50,000 in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days assets acquired pursuant to clause (B), or less (B), or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) make or agree to make any capital expenditures, except capital expenditures which, individually do not exceed $10,000 or in the aggregate, do not exceed $50,000;
(vii) other than in connection with the transactions contemplated by this Merger Agreement, adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, merger, consolidation, demutualizationrestructuring, acquisition, redomestication, sale of all recapitalization or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, ;
(viii) enter into or amend any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, collective bargaining agreement;
(ix) violate change any of its covenants under the Pooling Agreement (accounting principle used by it, except as defined below), or required by GAAP; or
(x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase engage in any manner the compensation oftransaction with, or enter into any contract relating to the borrowing of money byagreement, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognizearrangement, or involuntarily become subject tounderstanding with, directly or indirectly, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc’s affiliates.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Conduct of Business by the Company. The Company covenants From and agrees after the date hereof and prior to the Effective Time or such earlier date on which this Agreement is terminated as to provided in Section 9.01 hereof (the “Termination Date”), and except as may be (i) required by law (provided that before availing itself and of such exception, the Company Subsidiaries thatmust first consult with APRO), at all times up (ii) consented to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheldwriting by APRO, or as otherwise (iii) expressly permitted or contemplated by pursuant to this Agreement or as set forth on Agreement, the Company Disclosure ScheduleCompany:
(a) The Company shall, and shall cause each Company Subsidiary to, will conduct its operations according to its ordinary and usual course of business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall will use all commercially reasonable efforts to preserve intact its present business organization and preserve its regular services togoodwill, prevent any adverse change in the financial condition, liabilities, assets, business, operating results or prospects of the Company and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itprevent the destruction or damage to or loss of any asset of the Company that would have a Material Adverse Effect;
(b) Except as contemplated by this Agreementwill use commercially reasonable efforts to keep available the services of its current officers and other key employees and to preserve its relationships with those Persons having business dealings with the Company;
(c) will comply in all respects with (i) all laws and orders of all Governmental Authorities applicable to it and (ii) all Material Contracts;
(d) will not declare, the Company shall notset aside or pay any dividends on, and shall not permit except pursuant to Section 7.08, or make any Company Subsidiary distribution with respect to, make or redeem or purchase any outstanding shares of its capital stock;
(e) will not authorize or issue any shares of capital stock or other securities convertible into or in lieu of or in substitution for shares of its capital stock (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise);
(f) will not redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, any of its outstanding securities or any capital stock or other ownership interest of any other Person;
(g) will not authorize or effect any acquisition or disposition of any assets or release or relinquish any rights under a Material Contract;
(h) will not propose or adopt any amendments to its Articles of Incorporation or Bylaws;
(i) will not (i) make capital expenditures or incur or assume any additional indebtedness; (ii) incur any long-term indebtedness, (iii) create, or allow to be imposed, any Lien on its assets, (iv) make any change in its dividend practices loans, advances or policies capital contributions to, or in its underwritinginvestments in, pricingany other Person, or (v) pay, discharge or satisfy any claims, risk retentionliabilities or obligations (absolute, investmentaccrued, reinsurance practices asserted or policies unasserted, contingent or otherwise);
(j) will not make any loans, advances or other payments to any third party, including any officer or director of the Company or any Affiliate of such Persons;
(k) will not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the Merger);
(l) will not make any acquisition, by means of merger, consolidation or otherwise, of any direct or indirect ownership interest in or assets comprising any business enterprise or operation;
(m) will not authorize or enter into any agreement providing for management services to be provided by the Company to any third-party or an increase in management fees paid by any third-party under existing management agreements;
(n) enter into any other contract, arrangement or understanding;
(o) will not (i) make any Tax election or settle or compromise any Tax liability, (ii) change its fiscal year, or (iii) revalue any of its assets or (iv) change its methods of accounting (including, without limitation, make any material respect; and write-off or reduction in the Company agrees that it carrying value of any assets) in effect at December 31, 2004, except as required by changes in GAAP;
(p) will notify Parent and provide Parent with information not grant any increases in reasonable detail regarding the compensation of any material transactions (excluding investment transactions of its directors, officers or employees, except in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(cq) The Company shall will not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, pension retirement allowance or other employee benefit not required or contemplated by any Employee Plan as in effect on the current terms of any existing plan, agreement or arrangement date hereof to any such director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract new or amend any existing employment or waive severance agreement with any material provision of any material contract which would involve the payment by the Company such director, officer or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquireemployee, except pursuant to a contract as approved by APRO in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets)its sole discretion, (ii) pay or agree to pay any non-publicly traded securities bonus to any director, officer or employee (whether in excess the form of $1,000,000 per transaction cash, capital stock or $1,000,000 per issuer otherwise) except as approved by the Special Committee or creditpursuant to Section 7.04 hereof, or (iii) any investments in fixed income securities rated in NAIC (except as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets may be required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditcomply with applicable law, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or become obligated under any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Codenew Employee Plan;
(r) Neither will not engage in the conduct of any business the nature of which is materially different from the business in which the Company nor is currently engaged;
(s) will not forgive any indebtedness owed to the Company Subsidiary shall or convert or contribute by way of capital contribution any such indebtedness owed;
(it) make will not settle or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax mattercompromise, or agree to settle or compromise, any claim, suit or other litigation or matter in an arbitration proceeding;
(iiiu) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required as a result of a change in law or in GAAP, will not change any of the accounting principles or practices used by Applicable Lawit and maintain its books and records other than in accordance with GAAP consistently applied;
(sv) Other than in will not modify the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company SubsidiaryCompany’s insurance coverage; and
(tw) Neither the Company nor any Company Subsidiary shall will not agree, in writing or otherwise, to take any of the actions prohibited by foregoing actions. None of APRO, Burlington or the foregoing clauses Company shall take any action that would result in (ai) through any of their respective representations and warranties (s)without giving effect to any “knowledge” qualification) set forth in this Agreement that are qualified as to materiality becoming untrue, (ii) any of such representations and warranties (without giving effect to any “knowledge qualification) that are not so qualified becoming untrue in any material respect or (c) any of the conditions set forth in Article 8 not being satisfied, except as set forth in Section 9.01. Notwithstanding anything in this Section 6.03, APRO will not have, directly or indirectly, any right to control or direct the Company’s operations prior to the Effective Time and, prior to the Effective Time, the Company will exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations.
Appears in 1 contract
Samples: Merger Agreement (America First Apartment Investors Inc)
Conduct of Business by the Company. The Company covenants and agrees as Prior to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent except as contemplated by this Agreement, the Company shall, and shall otherwise consent cause each of its subsidiaries to, carry on their respective businesses in writingthe usual, which consent regular and ordinary course in substantially the same manner as heretofore conducted and in compliance in all material respects with all applicable laws and regulations and, to the extent consistent therewith, use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees and others having business dealings with them to the end that their goodwill and ongoing businesses shall not be unreasonably withheldimpaired at the Effective Time. Without limiting the generality of the foregoing, or prior to the Effective Time, except as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
, without the prior, express written consent of Parent (a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreementwhich may not be unreasonably delayed or withheld), the Company shall not, and shall not permit any Company Subsidiary of its subsidiaries to. (i) (x) declare, make set aside or propose to pay any dividends on, or make any change other distributions in respect of, any of its dividend practices capital stock, other than dividends and distributions by a direct or policies indirect wholly 22 owned subsidiary of the Company to its parent, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its underwritingcapital stock or (z) purchase, pricingredeem or otherwise acquire any shares of capital stock of the Company or any of its subsidiaries or any other securities thereof or any rights, claimswarrants or options to acquire any such shares or other securities; (ii) issue, risk retentiondeliver, investmentsell, reinsurance practices pledge or policies otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of Company Common Stock upon the exercise of Company Employee Stock Options outstanding on the date of this Agreement in accordance with their present terms); (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents; (iv) acquire or agree to acquire (x) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, limited liability company, partnership, joint venture, association or other business organization or division thereof, or (y) any assets that, individually or in the aggregate, are material to the Company and its subsidiaries taken as a whole; (v) sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets, except, in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions such case, in the ordinary course of business consistent with past practice, but including and except transactions involving the securitization between a wholly owned subsidiary of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries or another wholly owned subsidiary of the Company; (vi) (x) incur any indebtedness, except for floor plan financing and borrowings (net of cash, cash equivalents and marketable securities held by the Company or any of its subsidiaries) not in excess of $200,000 for 500,000 at any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) one time outstanding incurred in the ordinary course of business consistent with past practice, or (zy) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall notmake any loans, and shall not permit any Company Subsidiary advances or capital contributions to, make or investments in, any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other person, other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
direct or indirect wholly owned subsidiary of the Company; (hvii) Other than make or agree to make any new capital expenditure or capital expenditures, except in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or ; (viii) make any payment, direct material Tax election or indirect, of settle or compromise any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
material Tax liability; (iix) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts except in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber business or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are except as would not have a material to the financial condition of adverse effect on the Company, modify, amend or terminate any Company Subsidiary, material contract or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto agreement to which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since subsidiary is a party or waive, release or assign any material rights or claims thereunder; (x) make any material change to its accounting methods, principles or practices, except as may be required by generally accepted accounting principles; (xi) except as required to comply with applicable law and except as necessary to comply with Section 5.13, (w) adopt, enter into, terminate or amend any of the last such report;
Company's Compensation and Benefit Plans or other arrangement for the benefit or welfare of any current or former director, officer or employee, (jx) The Company agrees that it shall notincrease in any manner the compensation or fringe benefits of, nor shall it permit or pay any Company Subsidiary bonus to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary courseany director, consistent with existing strategiesofficer or employee (except for normal increases, make any equity real estate investments (other than through restructuring promotions or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than bonuses in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (iiy) pay any non-publicly traded securities in excess benefit not provided for under any of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or creditthe Companyts Compensation and Benefit Plans, or (ivz) except as permitted in clause (x), grant any real property awards under any bonus, incentive, performance or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, other compensation plan or materially amend arrangement or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after Company's Compensation and Benefit Plans (including the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status grant of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).23
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to during the period from the date of this Agreement and including continuing until the earlier of the termination of this Agreement or the Effective Time, unless Parent shall otherwise consent agree in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or and except as set forth on in Section 5.01 of the Company Disclosure Schedule:
(a) The , the Company shall, shall conduct its business and shall cause each Company Subsidiary to, conduct the businesses of its business subsidiaries to be conducted only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999in, and the Company and each its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company Subsidiary shall use all reasonable efforts best efforts, subject to the terms of this Agreement to keep available the services of the present officers, employees and consultants of the Company and its subsidiaries and to preserve intact the present relationships of the Company and its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment subsidiaries with customers, brokers, suppliers and all others having other persons with which the Company or any of its subsidiaries has significant business dealings with it;
(b) relations. Except as contemplated by this Agreement, other than the preceding sentence but including Section 5.01 of the Company shall notDisclosure Schedule, neither the Company nor any of its subsidiaries shall, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, and shall not permit any except as set forth in the Company Subsidiary toDisclosure Schedule, make directly or indirectly do, or propose to make do, any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company Charter Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) in the Company, any of its dividend practices subsidiaries or policies affiliates (except for the issuance of (i) shares of Class A Common Stock issuable pursuant to Company Stock Options outstanding on the date hereof or pursuant to the Company Employee Plans or in exchange for Class B Common Stock upon the conversion thereof pursuant to its underwritingterms, pricing(ii) shares of NW Preferred Stock, claimsto the extent required pursuant to the Amended and Restated Keep Well Agreement, risk retentiondated as of April 15, investment1998 (the "KEEP WELL AGREEMENT"), reinsurance practices or policies in any material respect; between the Company, The Fuji Bank, Limited and The Fuji Bank, Limited New York Branch (together, the Company agrees that it will notify Parent "STOCKHOLDER ENTITIES") and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course iii) shares of business consistent with past practice, but including transactions involving the securitization of Assets Class A Common Stock issuable as of the Company date of this Agreement pursuant to the terms of the Executive Deferred Compensation Plan, the Deferral Restoration Plan, the 2000-2001 Long Term Incentive Plan, the 2000-2002 Long Term Incentive Plan or of any Company Subsidiary and transactions involving derivative securitiesthe 2001-2003 Long Term Incentive Plan), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The sell, pledge, dispose of or encumber any assets of the Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, of its subsidiaries (except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, for (i) amend its charter sales of loans, receivables and other assets in securitization transactions or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than otherwise in the ordinary course of business consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $10 million in the aggregate);
(i) declare, set aside, make or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, except that (x) a wholly-owned subsidiary of the Company may declare and pay a dividend to its parent and other subsidiaries of the Company may declare and pay dividends in the ordinary course consistent with past practice and (y) the Company may declare and pay prior to the Effective Time (1) quarterly cash dividends of up to $0.10 per Share consistent with past practice and (2) cash dividends on the NW Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock pursuant to the terms thereof, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iii) except (A) as contemplated by this Agreement, (B) as required by the terms of any security as in effect on the date hereof and set forth in Section 5.01(d) of the Company Disclosure Schedule, (C) to the extent necessary to effect withholding to meet minimum Tax withholding obligations or pay the exercise price in connection with the exercise of any Company Stock Option, (D) with respect to the redemption of the NW Preferred Stock or (E) with respect to the Class B Common Stock upon the conversion thereof pursuant to its terms, amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, Shares, or any option, warrant or right, directly or indirectly, to acquire any such securities, or propose to do any of the foregoing, or (iv) settle, pay or discharge any material claim, suit or other action brought or threatened against the Company with respect to or arising out of a stockholder equity interest in the Company;
(i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, limited liability company or other business organization or division thereof, other than portfolio acquisitions in the ordinary course of business representing an aggregate asset amount of up to $500 million, or acquire any amount of assets, other than (A) pursuant to Ordinary Course Financing Agreements and the administration thereof, reasonably consistent with past practice or (B) in the ordinary course of business consistent with past practice in amounts that are not material; (ii) incur any indebtedness for money borrowed in money, except for (x) aggregate borrowings and reborrowings under the aggregate for the Company Company's or any of its subsidiaries' medium term note and the Company Subsidiaries commercial paper programs and (y) other borrowings not in excess of $200,000 for 2 billion in the aggregate; (iii) issue any such indebtedness having a maturity debt securities or assume, guarantee (other than guarantees of 90 days the Company's subsidiaries entered into in the ordinary course of business and except as required by any agreement in effect as of the date hereof and identified in Section 5.01(e) of the Company Disclosure Schedule) or less endorse, or $200,000 for otherwise as an accommodation become responsible for, the obligations of any such indebtedness having a maturity person, or make any loans or advances, except in the ordinary course of more than 90 days, business consistent with past practice; or (iv) agree to authorize any merger, consolidation, demutualization, acquisition, redomestication, sale capital expenditures or purchases of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, fixed assets (other than a Superior Acquisition Proposal as permitted hereinassets acquired to be leased) which are, in the aggregate, in excess of $20 million over the next 12 month period; or (v) prior to notifying Parent, enter into or materially amend any material partnership, joint venture or profit sharing contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 5.01(e);
(i) increase the compensation or severance payable or to become payable to its directors, officers, employees or consultants, except for increases in salary or wages of employees (other than contracts officers) of the Company or its subsidiaries, including in connection with insurance agents promotions, in the ordinary course of business consistent with past practices; or (ii) grant any severance or termination pay to (except to make payments required to be made under obligations existing on the date hereof in accordance with the terms of such obligations), (vi) or enter into or amend any contract limiting the ability employment or severance agreement, with any current employee of the Company or any of its subsidiaries, except for new hire employees in the ordinary course of business; or (iii) establish, adopt, enter into or amend any collective bargaining agreement, Company Employee Plan, including, without limitation, any plan that provides for the payment of bonuses or incentive compensation, trust, fund, policy or arrangement for the benefit of any current or former directors, officers, employees or consultants or any of their beneficiaries, except, in each case, as may be required by law; PROVIDED that the Company Subsidiary may pay cash signing bonuses to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than new hires in the ordinary course of business in amounts consistent with past industry practice;
(g) take any action to change accounting policies or procedures (including, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated herebywithout limitation, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract procedures with respect to revenue recognition, payments of accounts payable and collection of accounts receivable) except as required by a change in GAAP or the subject of any of interpretations thereof occurring after the foregoing clausesdate hereof;
(eh) The Company shall not, nor shall it permit make or revoke any Company Subsidiary to, issue material Tax election or sell settle or compromise any shares of or interests inmaterial Tax liability, or rights change (or make a request to any taxing authority to change) any material aspect of any kind to acquire any shares its method of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiaryaccounting for Tax purposes;
(fi) Except pay, discharge or satisfy any claims, liabilities or obligations (xabsolute, accrued, asserted or unasserted, contingent or otherwise) as set forth in excess of $10 million in the Company Disclosure Scheduleaggregate, (y) other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice, practice of liabilities reflected or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than reserved against in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth statements contained in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions SEC Documents or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or incurred in the ordinary course of business and consistent with past practice;
(j) materially restructure or materially change its gap position, through purchases, sales, xxxxxx, swaps, caps or collars or otherwise or the manner in which any current xxxxxx are classified or reported; or
(k) adopt a plan 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);
(l) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any subsidiary or joint venture;
(m) revalue in any material respect any of its assets, including, without limitation, writing-off notes or accounts receivable other than in the ordinary and usual course of business consistent with past practice or as required by GAAP;
(n) amend in any material respect any Material Contract;
(o) The Company shallsettle or compromise any pending or threatened suit, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect action or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage claim relating to the failure to so keep would not have a Company Material Adverse EffectTransactions;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited enter into any agreement or audited, as the case may be, SAP Statements filed by arrangement that limits or on behalf of otherwise restricts the Company or any Company Subsidiary of its subsidiaries or any successor thereto or that would reasonably be expected to, after the date hereof;Effective Time, limit or restrict the Surviving Corporation and its affiliates (including Parent) or any successor thereto, from engaging or competing in any line of business or in any geographic area; or
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax mattertake, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, agree in writing or otherwiseotherwise to take, to take any of the actions prohibited by the foregoing clauses (adescribed in Sections 5.01(a) through (s)p) above, or any action intended to or that would reasonably be expected to make any of the representations or warranties of the Company contained in this Agreement materially untrue or materially incorrect, prevent the Company from performing or cause the Company not to perform its covenants hereunder in any material respect, cause any condition to the Company's obligations to consummate the Transactions set forth in Article VII not to be satisfied or prevent or materially delay consummation of the Offer and the Merger .
Appears in 1 contract
Conduct of Business by the Company. The (a) Each Seller hereby instructs the Company covenants and agrees as to itself to, and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company agrees that it shall, and shall cause each Company Subsidiary to, between the date of this Agreement and the Closing or the earlier termination of this Agreement, except (1) as may be expressly contemplated by any other provision of this Agreement (including the Additional Financing, which shall be at the sole option of either Seller) or any Ancillary Agreement, (2) as set forth in Section 6.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), or (4) for any actions taken reasonably and in good faith to respond to COVID-19 Measures or Emergency Actions (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (4), the Company shall use reasonable best efforts to provide advance notice to and consult with SPAC (if reasonably practicable) prior to taking such actions), unless SPAC shall otherwise consent in writing (which consent shall not be unreasonably conditioned, withheld or delayed):
(i) conduct its their business only in the ordinary course and in Ordinary Course consistent with past practice; and
(ii) use its reasonable best efforts to preserve substantially intact the same manner as heretofore conducted since December 31, 1999, business organization of the Company and the Company Subsidiaries, to keep available the services of the current officers, key employees, service partners and each consultants of the Company and the Company Subsidiaries and the Sellers, to preserve the current relationships of the Company and the Company Subsidiaries with customers, Suppliers and other Persons with which the Company or any Company Subsidiary shall use all reasonable efforts to preserve intact its present has business organization and preserve its regular services torelations, and to maintain its relationships within effect all Company Permits, policyholders, insurers, reinsurers, agents, sales Environmental Permits and distribution organizations, underwriters, investment customers, brokers, suppliers Insurance Policies (in such amounts and all others having business dealings with it;such deductibles as are currently maintained).
(b) Except By way of amplification and not limitation, except (1) as may expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 6.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), and (4) for any actions taken reasonably and in good faith to respond to COVID-19 Measures or Emergency Actions (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (4), the Company shall use reasonable best efforts to provide advance notice to and consult with SPAC (if reasonably practicable), prior to taking such actions), the Company shall not, and the Company shall cause each Company Subsidiary not to, between the date of this Agreement and the Closing or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of SPAC (which consent shall not permit any Company Subsidiary tobe unreasonably conditioned, make withheld or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;delayed):
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur otherwise change any individual Liability or series organizational documents of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fii) Except (x) as set forth in issue, sell, pledge, dispose of, grant or encumber, or authorize the Company Disclosure Scheduleissuance, sale, pledge, disposition, grant or encumbrance of, (yA) in the ordinary course any Equity Interests of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partySubsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any Equity Interest (including any phantom interest), of the Company or any Company Subsidiary; or (B) any material assets of the Company or any Company Subsidiary;
(hiii) Other than 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;
(iv) declare, set aside, make or pay, or propose to declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, shares, property or otherwise or any combination thereof, with respect to any of its Equity Interests;
(v) adjust, reclassify, combine, split, subdivide, redeem, purchase or repurchase or otherwise acquire, directly or indirectly, any of its Equity Interests;
(vi) acquire or sell (including by merger, amalgamation, consolidation, combination or acquisition of stock or shares or substantially all of the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 assets or any other rights which are material to business combination) (i) any contract assets outside the Ordinary Course or make (ii) any paymentcorporation, direct partnership, other business organization or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out division thereof;
(ivii) The Company shall not, and shall not permit incur any Company Subsidiary to, Indebtedness or enter into any arrangements for a debt or equity offering (other than pursuant as contemplated by Section 6.04 or the Company Facilities);
(viii) make payments on the Purchased Loans;
(ix) amend the Affiliate Contracts to the operation of separate accounts effect increasing the Company’s and the Company Subsidiary’s financial obligations under these agreements unless such amendment is made in the ordinary course Ordinary Course or in the reasonable opinion of businessthe Company’s management required to fulfill obligations of the Company towards third parties incurred in the Ordinary Course;
(x) assume, consistent with existing strategiesguarantee or endorse, (i) sell, lease, mortgage, encumber or otherwise become responsible for, the obligations of any Person, or make any loans or advances, or intentionally grant any security interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes assets (other than changes in market values connection with the Additional Funding);
(xi) authorize, recommend, propose or ordinary course changes such as interest paymentsannounce an intention to adopt a plan or agreement of complete or partial liquidation, maturitiesdissolution or winding-up, etc.) affecting Investment Assets merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary which took place since (other than the last such reportliquidation of TP Technology Pool UG);
(jxii) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with ParentOrdinary Course, which results, individually or (A) grant any increase in the aggregatecompensation, incentives or benefits payable or to become payable to any current or former director, officer, employee or consultant (including any bonuses or similar awards in connection with the consummation of the Transactions), (iB) enter into any new (except as permitted under clause (xi)), or materially amend any existing, employment, retention, pension, bonus, change in control, severance or termination agreement with any current or former director, officer, employee or consultant, (C) accelerate or commit to accelerate the realization funding, payment, or vesting of any gross capital loss compensation or losses in benefits to any current or former director, officer, employee or consultant, (D) establish or become obligated under any collective bargaining agreement or other Contract with a labor union, trade union, works council, or other representative of employees; (E) hire any new employees holding an amount of $250,000 or more executive position (i.e., ‘C-level’ employees); or (iiF) an adverse impact on terminate the surplus employment or service of any employee other than any such termination for cause;
(xiii) adopt, amend and/or terminate any material Plan except as may be required by applicable Law, or is necessary in order to consummate the Transactions, or health and welfare plan renewals in the Ordinary Course;
(xiv) materially amend accounting policies or procedures, other than as required by HGB or IFRS;
(xv) (A) amend any material Tax Return, (B) prepare any material Tax Return in a manner which is not consistent with the past practice of the Company and the Company Subsidiaries with respect to the treatment of items on such Tax Returns, (C) change any material method of Tax accounting, (D) make, change or of an Company Subsidiary in an rescind any material election relating to Taxes, (E) settle or compromise any Tax audit, assessment, claim, controversy or proceeding relating to a material amount of $250,000 Taxes, (F) agree or moreconsent to the extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes with any Governmental Authority, or (G) surrender any right to claim a material refund of Taxes;
(kxvi) Other than (A) amend or modify or consent to the termination (excluding any expiration in accordance with its terms) of any such 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, 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; provided, however, in the ordinary course case of business consistent (A) and (B) except for Contracts with past practicecustomers or Suppliers in the Ordinary Course (provided that, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision provide the SPAC with written notice within a reasonable time of any material contract which would involve amendment, waiver, modification or consent or the payment entering into of any such Contract with customers and Suppliers) and except for Contracts in the Ordinary Course that involves consideration paid or payable to or by the Company or any Company Subsidiary of $200,000 or moreless than €50,000;
(lxvii) Other other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary toOrdinary Course, enter into any new, Contract or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of arrangement that obligates the Company or any Company Subsidiary after to develop any Intellectual Property related to the business of the Company or the Products;
(xviii) intentionally permit any material item of Company-Owned IP or permit to lapse or to be abandoned, invalidated, dedicated to the public, or disclaimed, or otherwise become unenforceable or fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and Taxes required or advisable to maintain and protect its interest in each and every material item of Company-Owned IP;
(xix) waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that are solely monetary in nature and do not exceed €250,000 individually or €500,000 in the aggregate;
(xx) enter any new line of business outside of its existing business as of the date hereof;; or
(qxxi) The Company enter into any formal or informal agreement or otherwise make a binding commitment to do any of the foregoing. Nothing herein shall not, nor shall require the Company permit to obtain consent from SPAC to do any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
foregoing if obtaining such consent might reasonably be expected to violate applicable Law (r) Neither the Company nor including any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined belowfiduciary duties), settlement and nothing contained in this Section 6.01 shall give to SPAC, directly or compromise with respect indirectly, the right to any material Tax matter, control or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in direct the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock operations of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither Subsidiaries prior to the Closing Date. Prior to the Closing Date, each of SPAC and the Company nor any Company Subsidiary shall agreeexercise, in writing accordance with the terms and subject to the conditions hereof, complete control and supervision of its respective operations, as required by Law. In addition to the Additional Funding (including any Additional Financing) or otherwise, to take any the use of the actions prohibited by existing and possible expansion of the foregoing clauses (a) through (s)Company Facility, the Company may obtain financing from third parties between the date hereof the and Closing if it obtains the prior written consent of each of the Seller and SPAC.
Appears in 1 contract
Samples: Business Combination Agreement (European Sustainable Growth Acquisition Corp.)
Conduct of Business by the Company. The Company covenants (a) From and agrees as after the date hereof and prior to itself the Effective Time and the Company Subsidiaries thatdate, at all times up if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), and including the Effective Timeexcept (i) as may be required by applicable Law, unless (ii) as may be agreed in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned); (iii) as otherwise may be expressly required or expressly permitted or contemplated by this Agreement or (iv) as set forth on in Section 5.1(a) of the Company Disclosure Schedule:
(a) The Letter, the Company shall, covenants and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and agrees with Parent that the Company and each Company Subsidiary its Subsidiaries shall use all reasonable efforts to preserve intact its present conduct their business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practicepractice and the Company shall use all commercially reasonable efforts to (A) preserve intact its current business organization, but including transactions involving (B) keep available the securitization services of Assets the key employees of the Company or of any Company Subsidiary and transactions involving derivative securitiesits Subsidiaries, subject to the restrictions set forth in Section 5.1(b), whether involving a purchase and (C) maintain satisfactory relationships with the material customers, lenders, suppliers and others having material business relationships with the Company or saleany of its Subsidiaries.
(b) Subject to the exceptions contained in clauses (i), (iii) and (iv) of Section 5.1(a), the Company agrees with Parent, on behalf of itself and its Subsidiaries, that it or any Company Subsidiary is seriously considering;between the date hereof and the Effective Time and, if earlier, the Termination Date, without the prior written consent of Parent, the Company:
(ci) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (i) amend whether in cash, assets, stock or other securities of the Company or its charter or by-laws (unless contemplated herebySubsidiaries), except (A) dividends and distributions paid by Subsidiaries of the Company to the Company or to any of its wholly owned Subsidiaries, (B) dividends or distributions by CAPL and (C) dividends or distributions by CAPL’s wholly owned Subsidiaries to CAPL or CAPL’s wholly owned Subsidiaries;
(ii) incur shall not, and shall not permit any individual Liability of its Subsidiaries to, split, combine or series reclassify any of related Liabilities its capital stock or issue or authorize or propose the issuance of any other securities in excess respect of, in lieu of $200,000 or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company that remains a wholly owned Subsidiary after consummation of such transaction;
(iii) except as required by existing written agreements or Company Benefit Plans, shall not, and shall not permit any of its Non-CAPL Subsidiaries to (A) increase the compensation or other benefits payable or provided to its directors and employees other than in the ordinary course of business consistent with past practicepractice (and, with respect to any Equity Awards, consistent with Section 5.1(b)(iii) of the Company Disclosure Schedule), (iiiB) incur enter into any indebtedness for money borrowed in employment, change of control, severance or retention agreement with any employee or other service provider of the aggregate for Company or any of its Subsidiaries (it being understood that the Company and the Company its Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, may enter into any material partnership, joint venture or profit sharing contract, other than contracts offer letters with insurance agents new hires in the ordinary course of business consistent with past practicesso long as such letters do not provide material severance or change-in-control benefits) or (C) establish, (vi) adopt, enter into or amend any contract limiting plan, trust, fund, policy or arrangement for the ability benefit of any current or former directors, officers or employees or any of their beneficiaries, except as would not result in a material increase in cost to the Company or any of its Subsidiaries or a material acceleration or increase in payments or benefits;
(iv) shall not, and shall not permit any Company Subsidiary to engage in any businessof its Subsidiaries to, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into or make any contract relating to the direct loans, advances or indirect guarantee of capital contributions to, or investments in, any obligation of any other Person in respect of indebtedness for borrowed money or other financial obligation of any Person (other than loans or advances to directors, employees, agents or consultants in the ordinary course of business consistent with past practice) or make any change in its existing borrowing, lending or investment arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(viiiv) enter into any contract that is reasonably likely to materially shall not, and adversely affect the consummation of the transactions contemplated hereby, (ix) violate shall not permit any of its covenants under the Pooling Agreement (as defined below)Subsidiaries to, change material financial accounting policies or (x) modify any contract with respect to the subject of procedures or any of the foregoing clausesits methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP or SEC rule or policy;
(evi) The shall not (A) amend any provision of its certificate of incorporation or bylaws or similar applicable charter or organizational documents or (B) permit any of its Subsidiaries to amend any provision of such Subsidiary’s certificate of incorporation or bylaws or similar applicable charter or organizational documents;
(vii) except for transactions exclusively among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, nor and shall it not permit any Company Subsidiary of its Subsidiaries to, issue issue, sell, pledge, dispose of or sell encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the its capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity ownership interests in the Company or any Subsidiaries of the Company Subsidiaryor any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities, take any action to cause to be exercisable any otherwise unexercisable Company Option (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options or awards or other Equity Awards outstanding on the date hereof) or otherwise effect any stock split, reclassification or similar adjustment, combination, exchange or readjustment of shares with respect to the capital structure of the Company or any of its Subsidiaries or amend the terms of any securities of the Company or any of its Subsidiaries, other than (a) issuances of Shares of Common Stock in respect of any exercise of Company Options or settlement of Equity Awards, in each case, outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b) and (b) liens securing obligations under the Company’s existing credit facilities;
(fviii) Except except for transactions exclusively among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of Shares of Common Stock or rights to acquire Shares of Common Stock from a holder of a Company Option in satisfaction of withholding obligations or in payment of the exercise price or from a holder of Equity Awards in satisfaction of withholding obligations upon the vesting of such Shares;
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money in the ordinary course of business and in a manner consistent with past practice, (C) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 5.1(b)(ix), (D) indebtedness for borrowed money incurred pursuant to debt agreements in effect as of the date hereof for the purpose of financing capital expenditures permitted by Section 5.1(b)(xiii), (E) other indebtedness for borrowed money incurred pursuant to agreements in effect as of the date hereof or the issuance of new commercial paper by the Company, not to exceed $15 million outstanding in the aggregate, and (F) with respect to any indebtedness not in accordance with clauses (A) through (E), for any indebtedness not to exceed $15 million in aggregate principal amount outstanding at the time incurred by the Company or its Subsidiaries; provided, that the restrictions set forth in this clause (ix) shall not apply to CAPL and its Subsidiaries so long as, immediately after incurring the applicable indebtedness, CAPL will be in compliance with the financial ratios set forth in Section 5.1(b)(ix) of the Company Disclosure Letter (the “CAPL Financial Ratios”);
(x) as set forth except for transactions exclusively among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, sell, assign, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including any sale-leasebacks or securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any portion of its tangible or intangible properties or assets having a value in excess of $10 million, individually or in the Company Disclosure Scheduleaggregate, except (yA) pursuant to existing agreements in effect prior to the execution of this Agreement and disclosed or made available to Parent prior to the date hereof or (B) for the sale of inventory in the ordinary course of business consistent with past practice; provided, or that the exceptions set forth in the foregoing clauses (zA) as required by the terms of agreements or plans already in effect or Applicable Law, and (B) shall not apply to any transactions between the Company and its Non-CAPL Subsidiaries, on the one hand, and CAPL or any of its Subsidiaries, on the other hand;
(xi) shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject Subsidiaries to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt materially and adversely modify or increase amend, terminate or grant any indemnification or hold harmless arrangements with waiver under any directorsCompany Material Contract, officers or other employees or agents of such party any Lease or any contract that would constitute a Company Material Contract or a Lease if entered into prior to the date hereof (other than the expiration or renewal of any Company Material Contract or any Lease in accordance with its terms), except for any Contract that, as entered into, modified or amended, (A) can be terminated by the Company or its Subsidiaries on 90 days’ or less notice without payment by the Company or its Subsidiaries of any other Person;
material penalty or (gB) Other than has a remaining term left of 12 months or less; provided, that CAPL and its Subsidiaries shall be permitted to do any of the foregoing in the ordinary course of business consistent with past practice, the Company ;
(xii) shall not, and shall not permit any of its Subsidiaries to, (A) 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) located in the U.S. for consideration in excess of $10 million (and none of the foregoing shall be permitted with respect to any entity, business or assets located in Canada); or (B) enter into any joint venture, partnership, limited liability or other similar agreements or arrangements relating to the formation, creation, operation, management or control of any joint venture, partnership or limited liability company with respect to any assets, businesses or divisions of the Company Subsidiary or its Subsidiaries located in the U.S. with a fair market value in excess of $10 million (and none of the foregoing shall be permitted with respect to any assets, businesses or divisions located in Canada); provided, that the restrictions set forth in this clause (xii) shall not apply to CAPL and its Subsidiaries so long as, immediately after the applicable transaction, CAPL will be in compliance with the CAPL Financial Ratios;
(xiii) shall not, and shall not permit any of its Subsidiaries to, make or agree to make any capital expenditure in excess of $15 million individually or in the aggregate, other than as contemplated by the capital expenditures budget of the Company set forth in Section 5.1(b)(xiii) of the Company Disclosure Letter;
(xiv) shall not, and shall not permit any of its Subsidiaries to, adopt or expenditures enter into a plan of complete or commitments for expenditures for partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the purchase Company or lease any of its Subsidiaries;
(xv) shall not, and shall not permit any products of its Subsidiaries to, enter into any new line of business outside the businesses being conducted by the Company and its Subsidiaries on the date hereof;
(xvi) shall not, and shall not permit any of its Subsidiaries to, settle, or services offer or group propose to settle, (A) any material litigation, investigation, arbitration, proceeding or other claim involving or against the Company or any of products or services its Subsidiaries (other than with respect any of the foregoing that relates to Investment AssetsTax matters), (B) which in one any stockholder litigation or a series of related transactions exceed $100,000 or which in the aggregate for dispute against the Company and the Company Subsidiaries taken as a whole exceed $200,000or any of its officers or directors or (C) any litigation, except for expenditures relating arbitration, proceeding or dispute that relates to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which in each case, other than settlements that involve the payment of monetary damages, in the aggregate, not in excess of the amount set forth in Section 5.1(b)(xvi) of the Company Disclosure Letter and without the imposition of equitable relief on, or the admission of wrongdoing by, the Company, any of its Subsidiaries or any Company Subsidiary is a partyof its officers or directors;
(hxvii) Other than shall not, and shall not permit any of its Subsidiaries to, make or change any material Tax election, change any material annual Tax accounting period, adopt or change any material method of Tax accounting, file any material amended Tax Returns or claims for material Tax refunds, enter into any closing agreement with respect to a material amount of Taxes, settle any material Tax claim, audit or assessment, surrender any right to claim a material Tax refund, offset or other reduction in tax liability or consent to any extension or waiver of the limitations period that could reasonably be expected to produce a material Tax claim or assessment, in each case, except in the ordinary course of business consistent with past practice, the Company ; and
(xviii) shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (CST Brands, Inc.)
Conduct of Business by the Company. The Company covenants and agrees as From the date hereof to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless the Company will and will cause each of its Subsidiaries to, except, in each case, as (x) otherwise expressly provided herein, (y) listed on Schedule 5.2 hereto, or (z) consented to in writing by Parent shall otherwise or Newco (such consent in writing, which consent shall not to be unreasonably withheld, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to), conduct its business only in the ordinary and regular course and in substantially the same manner as heretofore conducted since December 31conducted, 1999and use its commercially reasonable efforts, consistent with past practices, to preserve intact its business relationships with third parties, including, without limitation, customers, suppliers, distributors and employees, and to keep available the services of its present officers and employees, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services towill not, and maintain will not permit any of its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with itSubsidiaries to:
(a) take or omit to be taken any action which would result in a Material Adverse Effect or that would make any representation or warranty of the Company hereunder inaccurate at the Effective Time such that the closing condition set forth in Section 6.2(a) shall not be satisfied as of such date;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make adopt or propose to make any change in its dividend practices articles of incorporation or policies by-laws or in its underwritingother organizational documents;
(c) merge or consolidate with any other Person, pricingacquire a material amount of the assets of any other Person, claims, risk retention, investment, reinsurance practices or policies purchase or otherwise acquire any equity interest in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding Person;
(d) sell, lease, license or otherwise dispose of any material transactions assets or property except (excluding investment transactions i) pursuant to existing contracts or commitments disclosed on Schedule 3.15 or (ii) in the ordinary course of business consistent with past practice;
(e) declare, but including transactions involving the securitization set aside or pay any dividend on, or make any other distribution in respect of Assets (whether in cash, stock or property), outstanding shares of capital stock, except for dividends by a Subsidiary to the Company or another Subsidiary, or sell, transfer, pledge, encumber or otherwise dispose of any Company Subsidiary and transactions involving derivative securities)equity interests in any Subsidiary; provided, whether involving a purchase or salehowever, that it or the Company may distribute to holders of Company Equity Securities any cash prior to the Closing, so long as the Company Subsidiary is seriously consideringhas provided written notice of any such distribution to Parent at least 3 Business Days prior to such distribution;
(cf) The Company shall not make redeem, purchase or otherwise acquire, or offer or propose to redeem, purchase or otherwise acquire, any material change in accounting methods outstanding shares of capital stock of, or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expensesother equity interests in, or any change in depreciation securities that are convertible into or amortization policies exchangeable for any shares of capital stock of, or rates adopted by itother equity interests in, except as required by Applicable Lawor any outstanding options, GAAP warrants or SAPrights of any kind to acquire any shares of capital stock of, or other equity interests in, the Company or any of its Subsidiaries;
(dg) The effect any reorganization or recapitalization, split, combine or reclassify any of the capital stock of, or other equity interests in, the Company shall notor any of its Subsidiaries or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of such capital stock or such equity interests;
(h) offer, sell, issue or grant, or authorize or propose the offering, sale, issuance or grant of, any shares of capital stock of, or other equity interests in, any securities convertible into or exchangeable for (or accelerate any right to convert or exchange securities for) any shares of capital stock of, or other equity interest in, or any options, warrants or rights of any kind to acquire any shares of capital stock of, or other equity interests in, or any voting securities of, the Company or any of its Subsidiaries, other than issuances of shares of Common Stock and shall not permit any Company Subsidiary to, Series E Preferred Stock upon the exercise of stock options and warrants issued pursuant to the Options and the Series E Preferred Stock Warrants and outstanding at the date of this Agreement in accordance with the terms thereof (as in effect on the date of this Agreement);
(i) cancel or materially amend its charter any insurance policy;
(j) settle or by-laws (unless contemplated hereby)agree to settle any litigation, (ii) incur any individual Liability action or series of related Liabilities in excess of $200,000 proceeding other than in the ordinary course of business consistent with past practice, (iii) incur practices but not in any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries case involving amounts in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more75,000;
(k) Other than (i) incur or assume long-term debt in amounts in the ordinary course aggregate in excess of business consistent with past practice$50,000, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision obligations of any material contract which would involve the payment by other Person (except the Company or its Subsidiaries), except such obligations which do not have an aggregate value of greater than $50,000, (iii) make any loans, advances or capital contributions to any other Person (except the Company Subsidiary or its Subsidiaries) in amounts in the aggregate in excess of $200,000 50,000, or more(iv) mortgage or pledge any material assets or create any Lien upon any material assets except for Permitted Liens;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit effect any Company Subsidiary to, settle or compromise any claim change in any actionaccounting methods, proceeding principles or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract practices in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999Most Recent Balance Sheet Date, except as may be required by Applicable Lawa change in GAAP or applicable law;
(sm) Other than enter into or assume any contract, agreement or other arrangement which, if in existence on the date hereof, would be required to be disclosed in Schedule 3.15, or modify, amend or terminate any contract, agreement or other arrangement required to be disclosed in Schedule 3.15, except in the ordinary course of business and consistent with past practice, neither or waive, release or assign any material rights or claims under, or violate any of the material terms of, any contract, agreement or other arrangement required to be disclosed in Schedule 3.15;
(n) abandon, fail to maintain or cancel any material Company nor Intellectual Property Rights owned by the Company, except for such Company Intellectual Property Rights that have reached the end of their term and cannot be renewed or extended;
(o) make or change any Company Subsidiary shall declarematerial election with respect to Taxes or compromise, set aside settle or pay otherwise discharge any dividends audit or distributions claim with respect to material Taxes;
(whether in cashp) (i) adopt, stock amend, renew or propertyterminate any employee benefit plan (including any Employee Benefit Plan) in respect of or any capital stock of agreement, arrangement, plan or policy between the Company or any of its Subsidiaries and one or more of its current or former directors, officers or employees, (ii) except for normal increases in the ordinary course of business consistent with past practice or except as required by applicable law, increase in any manner the compensation or fringe benefits of any director, officer or employee, or pay any benefit not contemplated by any Employee Benefit Plan or agreement as in effect as of the date hereof, except that the Company Subsidiary may, at the discretion of its board of directors, pay, immediately prior to the Closing, special bonuses to employees of the Company in an aggregate amount not to exceed $150,000, or redeem(iii) make any equity or equity-based grants or allocations under any Employee Benefit Plan (including the granting of stock options, purchase stock appreciation rights, restricted stock, restricted stock units or otherwise acquire performance units or shares); or (q) agree or commit to do any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Russell Corp)
Conduct of Business by the Company. The Company covenants and agrees as to itself and Except for matters set forth in Section 5.01 of the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, Disclosure Letter or as otherwise expressly permitted or contemplated by this Agreement or as set forth on consented to or approved in advance in writing by a designated representative of Parent, from the Company Disclosure Schedule:
(a) The date of this Agreement to the Effective Time, the Company shall, and shall cause each Company Subsidiary to, conduct its business only in the usual, regular and ordinary course and (to the extent consistent with reasonable business judgment) in substantially the same manner as heretofore previously conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all its reasonable best efforts to preserve intact its present current business organization organization, keep available the services of its current officers and preserve its regular services to, employees and maintain keep its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings with it;
(b) Except as them with the goal that its goodwill and ongoing business shall be unimpaired in all material respects at the Effective Time. In addition, and without limiting the generality of the foregoing, except for matters set forth in Section 5.01 of the Company Disclosure Letter or otherwise expressly contemplated by this Agreement, from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, make do any of the following without the prior written consent of a designated representative of Parent, which consent, with respect to any actions not otherwise permitted by subsections (v), (vi), (viii) and (x) (and, to the extent applicable thereto, subsection (xi)) below, shall not be unreasonably withheld:
(i) (A) declare, set aside or propose to pay any dividends on, or make any change other distributions in respect of, any of its capital stock, other than (1) dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to its parent, (2) dividends and distributions declared prior to the date of this Agreement by a direct or indirect non-wholly owned subsidiary of the Company, (3) regular quarterly cash dividends with respect to the Company Common Stock, not in excess of $0.07 per share, with usual declaration, record and payment dates and in accordance with the Company's past dividend practices policy and (4) in the fiscal quarter in which the Closing Date occurs, a prorated cash dividend, the amount of which shall not exceed the amount determined by multiplying (x) the number of days elapsed after the record date of the Company's most recent regular quarterly cash dividend through the next 36 32 record date, divided by 90, by (y) $0.07, but only if such amount is $0.035 or policies greater, (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 shares of its underwritingcapital stock, pricingor (C) purchase, claimsredeem or otherwise acquire any shares of capital stock of the Company or any Company Subsidiary or any other securities thereof or any rights, risk retentionwarrants or options to acquire any such shares or other securities, investmentother than repurchases of Company Employee Stock Options, reinsurance practices Company SARs and Company Restricted Shares (with associated Company Rights, if any) in accordance with the terms of any applicable Company Stock Plan, at or policies based upon a price per share of Company Common Stock no greater than the then-current market price of Company Common Stock;
(ii) issue, deliver, sell or grant (A) any shares of its capital stock, (B) any Voting Company Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, Voting Company Debt, 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 (and associated Company Rights) upon the exercise of Company Employee Stock Options outstanding on the date of this Agreement or granted after the date of this Agreement in accordance with clause (3) below, in accordance with their present terms, (2) the issuance of Company Capital Stock upon the exercise of Company Rights, (3) the grant and issuance of Company Employee Stock Options, Company Restricted Shares or Company SARs consistent with past practice and in the ordinary course of business pursuant to the present terms of the Company Stock Plans, covering or relating to no more than 1,500,000 shares, in the aggregate, of Company Common Stock, PROVIDED that any material respect; such Company Employee Stock Options or Company SARs are issued based upon a price per share of Company Common Stock no less than the then-current market price of Company Common Stock, and that the Effective Time shall not have occurred on or before September 30, 2001, (4) the grant and issuance of Company Phantom Shares in the ordinary course of business consistent with past practice pursuant to director or employee deferral elections under the Company's Deferred Compensation Plan and the Company's Executive Savings Investment Plans, in accordance with the terms of such plans as in effect on the date of 37 33 this Agreement and (5) the grant and issuance of Company Employee Stock Options pursuant to restoration or reload options outstanding on the date of this Agreement in accordance with the terms of such options and the Company agrees Stock Plans as in effect on the date of this Agreement;
(iii) amend the Company Charter or the Company Bylaws in any way except as disclosed in the Company's 2000 Proxy Statement or, in the case of any Significant Subsidiary of the Company, amend its comparable charter or organizational documents in a manner adverse to Parent;
(iv) (A) amend the Company Rights Agreement, (B) redeem the Company Rights or (C) take any action with respect to, or make any determination under, the Company Rights Agreement, other than in order to cause the Company Rights not to become separated from the shares of Company Common Stock or a Distribution Date not to occur following the commencement of a tender or exchange offer for shares of Company Common Stock, in each case until a Shares Acquisition Date has occurred;
(A) acquire by merging or consolidating with, or by purchasing a substantial equity interest in or portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof (other than transactions which do not exceed $25 million individually or $100 million in the aggregate), (B) acquire any assets that it will notify Parent are material, individually or in the aggregate, to the Company and provide Parent with information in reasonable detail regarding any material transactions the Company Subsidiaries, taken as a whole (excluding investment other than transactions in the ordinary course of business consistent with past practice) or (C) make any new capital expenditure or expenditures, but including transactions involving other than, in the securitization case of Assets clauses (B) and (C) above, those consistent with the amounts set forth in the Company's consolidated capital spending budget for the Company's 2001 fiscal year (a true and complete copy of which has been delivered to Parent prior to the date of this Agreement) plus $30 million, or as otherwise set forth in Section 5.01 of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringDisclosure Letter;
(cvi) The Company shall not make (A) grant to any Relevant Person any material change increase in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but compensation that is not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by itthe ordinary course, except as to the extent required by Applicable Law, GAAP Law or SAP;
(d) The under employment agreements which were in effect as of the date of the most recent audited financial statements included in the Filed Company shall not, and shall not permit any SEC Documents or which 38 34 are set forth in Section 5.01 of the Company Subsidiary toDisclosure Letter, (iB) amend its charter grant to any Relevant Person any material increase in severance or by-laws (unless contemplated hereby)termination pay, except to the extent required by Law or under any agreement which was in effect as of the date of the most recent audited financial statements included in the Filed Company SEC Documents or which is set forth in Section 5.01 of the Company Disclosure Letter, (iiC) incur enter into or amend any individual Liability employment, consulting, indemnification, severance or series of related Liabilities in excess of $200,000 termination agreement with any Relevant Person, other than in the ordinary course of business consistent with past practice, (iiiD) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 daysestablish, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parentadopt, enter into or amend in any material partnershiprespect any collective bargaining agreement or Company Benefit Plan except as required by Law, joint venture (E) take any action to accelerate any material rights or profit sharing contractbenefits, other than contracts with insurance agents or make any material determinations not in the ordinary course of business consistent with past practicesprior practice, under any collective bargaining agreement, Company Benefit Plan or employment, indemnification, severance or termination agreement with any Relevant Person or (viF) enter into any contract limiting amendment of the ability Trust Agreement (other than the Trust Amendment); PROVIDED, that any actions which are not otherwise prohibited by this subsection (vi) do not in the aggregate increase the annual compensation, benefits or other such expenses of the Company and the Company Subsidiaries, taken as a whole, by more than (x) 2% if the Effective Time occurs on or prior to September 30, 2001, or (y) an additional 6% if the Effective Time occurs after September 30, 2001, in each case compared to such compensation, benefits or other expenses as of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, the date of this Agreement;
(vii) enter into make any contract relating change in accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company, except insofar as may be required by or advisable under Law or GAAP;
(viii) other than as permitted pursuant to subsection (x) of this Section 5.01(a), sell, lease (as lessor), license or otherwise dispose of or subject to any Lien any properties or assets (including intellectual property), other than transactions in the direct ordinary course of business and not exceeding $25 million individually or indirect guarantee of $100 million in the aggregate;
(A) incur any obligation of any Person in respect of indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other 39 35 rights to acquire any debt securities of the Company or any Company Subsidiary, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial obligation statement condition of another person or enter into any arrangement having the economic effect of any Person of the foregoing, except for (x) short-term borrowings incurred in the ordinary course of business, (y) indebtedness or borrowings by the Company and the Company Subsidiaries that may be redeemed or repaid without premium or penalty on not more than 30 days' notice or (z) obligations of the Company and the Company Subsidiaries of not more than $50 million in the aggregate, or (B) make any loans, advances or capital contributions to, or investments in, any other person in a material amount (other than as permitted by subsection (v) of this Section 5.01(a)), other than to or in the Company or any direct or indirect wholly owned subsidiary of the Company;
(x) (A) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business or in accordance with their terms, (B) cancel any material indebtedness (individually or in the aggregate) or waive or settle any claims or rights of material value other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (xC) modify any contract with respect to waive the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation benefits of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay modify in any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject tomanner, any labor organization confidentiality, standstill or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts similar agreement to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant if and to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or extent the Company and receives an unsolicited request by the other party to such agreement for such a waiver or modification in order to permit such other party to make or participate in a Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens Takeover Proposal (as defined belowin Section 5.02) and Liens not individually to participate in excess of $100,000 discussions and not aggregating negotiations with the Company in excess of $200,000 or connection therewith (iia "PERMITTED WAIVER"); or
(xi) restructure, amend, modify or otherwise affect authorize any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiaryof, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions commit or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (Ralston Purina Co)
Conduct of Business by the Company. The Each of the Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to Operating Partnership covenants that during the period from the date of this Agreement and including continuing until the earlier of (i) the Effective TimeTime and (ii) the termination of this Agreement pursuant to its terms, unless Parent shall otherwise consent in writing, which writing (such consent shall not to be unreasonably withheld, delayed or conditioned), and except to the extent required by Law, or as otherwise expressly permitted or contemplated by this Agreement or as set forth on disclosed in Section 5.1 of the Company Disclosure Schedule, and except as otherwise expressly required or permitted by this Agreement:
(a) The the business of the Company, the Operating Partnership and the other Company Subsidiaries (other than the Xxxxxx Companies in accordance with the terms of the Xxxxxx Purchase Agreement) shall be conducted only in the ordinary course and consistent with past practice, and the Company and the Operating Partnership shall, and shall cause each of the other Company Subsidiaries (other than the Xxxxxx Companies in accordance with the terms of the Xxxxxx Purchase Agreement) to, use reasonable best efforts (i) to preserve intact its present business, assets, organization and goodwill, (ii) to preserve the current beneficial relationships of the Company, the Operating Partnership and the Company Subsidiaries with any Person with which the Company, the Operating Partnership or any Company Subsidiary has material business relations (including customers, suppliers, directors, officers and key employees) and (iii) to keep available the services of its officers and key employees and (where applicable) to maintain its qualification as a REIT within the meaning of Section 856 of the Code;
(b) each of the Company and the Operating Partnership shall not, and shall cause each Company Subsidiary not to, conduct do any of the following: (i) sell, pledge, lease, dispose of, exclusively license or encumber or grant any third party any rights with respect to any property or assets, except for (A) the granting of mortgages and security interests in connection with the refinancing of Indebtedness existing on the date of this Agreement and that matures at or prior to Closing, without any penalty or premium, (B) dispositions of immaterial assets (expressly excluding Company Properties) or (C) the consummation of the Xxxxxx Sale in accordance with the Xxxxxx Purchase Agreement; (ii) amend or propose to amend its business only charter or bylaws (or comparable organizational documents) including the Charter and the OP Certificate; provided that the Company may amend the bylaws of the Company so that bylaws in the ordinary course form of MergerSub’s bylaws shall be the bylaws of the Company from and after the Effective Time; (iii) split, combine or reclassify any shares of its stock or other equity securities or interests; (iv) declare, set aside or pay any dividend on or make any other distributions (whether in substantially the same manner as heretofore conducted since December 31cash, 1999stock, and property or otherwise) with respect to such shares, equity securities or interests except for (A) payment by the Company and each the Operating Partnership of a one-time dividend and distribution, respectively, at a rate not to exceed $0.10 per share of Company Common Stock or per OP Unit and LTIP Unit, as previously publicly announced by the Company and having a record date of December 27, 2011; (B) declaration and payment by the Company and the Operating Partnership of the Xxxxxx Dividend, if any, pursuant to Section 5.14, (C) declaration and payment by the Company and the Operating Partnership of regular quarterly dividends and distributions, respectively, at a rate not to exceed $0.53125 per share of Series A Preferred Stock or Series A Preferred Partnership Unit and a pro rated dividend and distribution for the period from the last record date for a regular quarterly dividend and distribution through and including the Closing; (D) dividends paid by a direct or indirect Company Subsidiary shall use all reasonable efforts (other than any Xxxxxx Company) to preserve intact its present business organization such Company Subsidiary’s parent; and preserve its regular services to, and (E) the minimum distributions required for the Company to maintain its relationships withqualification as a REIT, policyholdersto avoid the imposition of any Taxes under Section 4981 of the Code and to avoid incurring any Taxes under Section 857 of the Code; (v) redeem, insurerspurchase, reinsurersacquire or offer to acquire any shares of its capital stock or other equity securities or OP Units; provided, agentsthat the Company may redeem or exchange OP Units for cash or shares of Company Common Stock in accordance with the provisions of the Operating Partnership Agreement; or (vi) enter into any contract, sales and distribution organizationsagreement, underwriters, investment customers, brokers, suppliers and all others having business dealings commitment or arrangement with it;respect to any of the matters listed in clauses (i) through (v) above; and
(bc) Except as contemplated by this Agreement, each of the Company and the Operating Partnership shall not, and shall cause each Company Subsidiary not permit to:
(i) issue, sell, pledge, grant or dispose of, or agree to issue, sell, pledge, grant or dispose of, any of its stock or other equity securities or interests, or securities convertible or exchangeable for, or any options, warrants or rights of any kind to acquire any of its stock or other equity interests or other property or assets whether pursuant to the Company Benefit Plans or otherwise; provided, that the Company may issue shares of Company Common Stock in exchange for OP Units, pursuant to and in accordance with the provisions of the Operating Partnership Agreement;
(ii) acquire or agree to acquire (by merger, consolidation or acquisition of stock or assets) any real property, corporation, partnership or other business organization or division thereof (except of or from the Operating Partnership or an existing wholly-owned Company Subsidiary (other than any Xxxxxx Company)), or acquire other assets, other than in the ordinary course, except as set forth on Section 5.1(c)(ii) of the Company Disclosure Schedule;
(iii) merge or consolidate with any other Person or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company, the Operating Partnership or any Company Subsidiary (other than the Mergers or, in accordance with the Xxxxxx Purchase Agreement, the Xxxxxx Sale);
(iv) except for (A) borrowings and re-borrowings under the revolving credit facilities, as in effect as of the date of this Agreement, up to an aggregate outstanding balance not to exceed $95,000,000 or (B) amounts available for borrowing as of the date of this Agreement under the Construction Loan Agreements, incur, create or assume any Indebtedness or issue or amend the terms of any debt securities or assume, guarantee or endorse, or otherwise become responsible for the obligations of any other Person or entity (other than the Operating Partnership or a wholly-owned Company Subsidiary (other than any Xxxxxx Company)) for borrowed money; provided, however, that in no event shall any Xxxxxx Company take any of the actions set forth in this clause (iv) or otherwise incur any Indebtedness that will be required to be discharged by the Xxxxxx Seller under the Xxxxxx Purchase Agreement;
(v) make any loans, advances or capital contributions to, make or propose investments in, any other Person, other than by the Company, the Operating Partnership or a wholly-owned Company Subsidiary to make (A) the Company, the Operating Partnership, a wholly-owned Company Subsidiary (other than any change Xxxxxx Company), (B) a joint venture as set forth in its dividend practices Section 5.1(c) of the Company Disclosure Schedule, or policies (C) one or more of the Xxxxxx Companies in its underwritingaccordance with Section 2.02(b)(iv) and 2.02(c) of the Xxxxxx Purchase Agreement;
(vi) enter into, pricingrenew or materially modify, claimsor grant any material consents or waivers under, risk retentionany Company Material Contract or any other contract, investmentagreement or commitment that, reinsurance practices if it were in effect as of the date hereof, would be a Company Material Contract (including any contract, lease, agreement or policies commitment (A) of a nature that would be required under the Exchange Act to be filed as an exhibit to the Company’s Annual Report on Form 10-K, (B) having a remaining term of more than one year and not terminable (without penalty) on notice of 180 days or less that require payments per year in the aggregate in excess of $1,000,000, (C) imposing any material restrictions on the ability of the Company, the Operating Partnership or any other Company Subsidiary to engage in any line of business, or otherwise imposing material respect; limitations on the conduct of business by the Company, the Operating Partnership or any other Company Subsidiary, (D) for insurance, or (E) any Company Benefit Plan, other than contracts for the sale, license, lease or rent of the Company’s, the Operating Partnership’s or the other Company Subsidiaries’ products or services in the ordinary course of business and other than contracts that are solely the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding obligation of the Xxxxxx Companies);
(vii) terminate, amend, modify, assign, waive, release or relinquish any material transactions contract rights or any other material rights or claims other than (excluding investment transactions A) in the ordinary course of business consistent with past practicepractices and (B) contract rights, but including transactions involving other rights or claims that are solely for the securitization of Assets benefit, or solely the obligation, of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringXxxxxx Companies;
(cviii) The Company shall not make settle or compromise any material change in accounting methods claim, action, suit, arbitration or practicesproceeding pending or threatened against the Company, the Operating Partnership or any other Company Subsidiary, including without limitation any change with respect relating to establishment of reserves for unearned premiumsTaxes, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 each case other than in the ordinary course of business consistent with past practicepractices and to the extent covered by insurance;
(ix) make any change in the compensation of any officer of the Company, the Operating Partnership or any other Company Subsidiary (other than with respect to changes in compensation that will be solely the obligation of the Xxxxxx Companies and effected in accordance with the terms of the Xxxxxx Purchase Agreement);
(x) change its accounting principles, practices or methods, except as may be required by the SEC, applicable Law or GAAP;
(xi) make or rescind any election relating to Taxes unless the Company reasonably determines, after consultation with Parent, that such action is required by applicable Law or necessary or appropriate to preserve the Company’s qualification as a REIT, the Operating Partnership’s status as a partnership or the disregarded or partnership status of any other Company Subsidiary other than a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code, or otherwise agreed to by Parent and the Company;
(xii) enter into any contracts with any Affiliate of the Company, other than (A) contracts solely with or among the Operating Partnership or the other Company Subsidiaries (other than the Xxxxxx Companies), (iiiB) incur contracts solely between any indebtedness for money borrowed in the aggregate for the Xxxxxx Company and any of the Company Subsidiaries in excess Professional Affiliated Companies or (C) the Xxxxxx Purchase Agreement and the Xxxxxx Release;
(xiii) prepay any Indebtedness (which shall be deemed to include pre-payments or repayments of $200,000 for any such indebtedness having a maturity lines of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement credit facilities or other similar reorganizationlines of credit or payments made in respect of any termination or settlement of any interest rate swap or other similar hedging instrument relating thereto) except in connection with sales of real property permitted hereunder;
(xiv) pay, arrangement discharge or business combinationsatisfy any claims, liabilities or other than a Superior Acquisition Proposal as permitted hereinobligations, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents except in the ordinary course of business consistent business, and in accordance with past practicestheir terms or as otherwise covered by insurance;
(xv) other than expenditures by the Xxxxxx Companies and other than expenditures that are reimbursed by tenants at Company Properties, make any expenditures (A) on a property-by-property basis, in excess of 2.5% above the amount of such expenditure set forth in the Company’s operating or capital expenditures budget for each such property for fiscal year 2012 or (B) with respect to all such properties, in excess of 2% in the aggregate above such operating or capital expenditures budget for all such properties for fiscal year 2012;
(xvi) except as required by the Company Benefit Plans or Company Material Contracts currently binding on the Company, (viA) amend or terminate or make any commitment to amend or terminate any Company Benefit Plan except as necessary to comply with Law, or adopt or enter or make any commitment to adopt or enter into any contract limiting the ability additional employee benefit plan, program, policy or agreement that would be a Company Benefit Plan if it were in existence as of the date of this Agreement, (B) make any increase in or commitment to increase the amount of compensation or fringe benefits of, or pay any bonus to, any current or former employee, director or officer of the Company, the Operating Partnership or any other Company Subsidiary or of make any increase in or commitment to increase, in any material respect, any benefits provided under any Company Subsidiary Benefit Plan (including any severance plan), (C) enter into, amend, or terminate, or make any commitment to engage enter into, amend or terminate, any collective bargaining agreement or other labor union contract, other than as required by Law (other than such agreements and contracts with respect to the Xxxxxx Companies unless such action could result in any businessliability to the Parent or its Affiliates, including following the Closing), (D) grant any awards under any Company Incentive Plan or Company Benefit Plan, (E) take any action or exercise any discretion to compete with accelerate the vesting or payment of, or to fund or in any Personother way secure the payment of, to do business with any compensation or benefit under any Company Benefit Plan, (F) extend an offer of employment to, or hire, any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of terminate any Person other than in the ordinary course of business consistent with past practicea termination for cause, (viiiG) grant or make a commitment to grant any severance or termination pay to, or enter into any contract that is reasonably likely to materially and adversely affect the consummation severance agreement with, any director, officer, or employee of the transactions contemplated herebyCompany, the Operating Partnership or any other Company Subsidiary, (ixH) violate loan or advance any of its covenants under the Pooling Agreement (as defined below)money or other property to any present or former employee, director, or officer of the Company, the Operating Partnership or any other Company Subsidiary, or forgive any loans to any present or former employee, director, or officer of the Company, the Operating Partnership or any other Company Subsidiary; provided, however, that (x) modify the Xxxxxx Companies can take such actions if such actions will result in obligations that relate solely to, and are funded solely by, the Xxxxxx Companies; provided, further, that none of the Acquired Companies or Xxxxxx Companies will take any contract action to, or give any notice of its intent to, withdraw from any Multiemployer Plan;
(xvii) transfer or hypothecate the Business or any assets, property, rights or interests thereof or used therein to any Xxxxxx Company or any other Person, or enter into any agreement with respect to any Person other than the subject of Purchaser Parties in connection with any of the foregoing clausesforegoing;
(exviii) The Company shall notother than the Xxxxxx Purchase Agreement and the Xxxxxx Release, nor shall it enter any agreement, arrangement or transaction with any Xxxxxx Company, on the one hand, and any Acquired Company, on the other hand;
(xix) cause or permit any employee of any Xxxxxx Company Subsidiary to, issue to be transferred to or hired by any Acquired Company;
(xx) offer or sell any shares interest in any joint venture or property of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fxxi) Except amend or modify in any respect (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practicewhether by change order or otherwise), or (z) as required by the terms of agreements or plans already in effect or Applicable Lawterminate, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make agreement between any paymentAcquired Company, direct or indirecton the one hand, of and any Liability in excess of $100,000 before Xxxxxx Company, on the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;other hand; or
(ixxii) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing listed in clauses (ai) through (s)xxi) above.
Appears in 1 contract
Samples: Merger Agreement (Ventas Inc)
Conduct of Business by the Company. The During such period, and except (i) as required by this Agreement, (ii) as may be required by applicable Law (including any COVID-19 Measures) or pursuant to the terms of any Company covenants and agrees Benefit Plan as to itself and in effect on the date hereof, (iii) as set forth in Section 6.1 of the Company Subsidiaries that, at all times up to and including Disclosure Letter or (iv) with the Effective Time, unless prior written consent of Parent shall otherwise consent in writing, (which consent shall will not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by this Agreement or as set forth on delayed), the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, use its reasonable best efforts to conduct its business only and the business of the Company Subsidiaries in the ordinary course and in substantially all material respects, and, to the same manner as heretofore conducted since December 31extent consistent therewith, 1999, and the Company and each Company Subsidiary shall use all reasonable best efforts to to: (A) preserve intact its present business organization organizations, goodwill, assets, properties and Contracts and maintain and preserve its regular services torights, franchises and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment keep available existing relations with customers, brokerssuppliers, suppliers licensors, licensees, manufacturers, distributors, officers, employees, business associates and all others other Persons having business dealings with it; and (B) maintain and enforce in all material respects the material Owned Intellectual Property that the Company has the right to prosecute and enforce consistent with past practice and subject to the Company’s reasonable business judgement; provided that (x) no action by the Company or any Company Subsidiary to the extent expressly permitted by an exception to clauses (a) through (v) of the following sentence of this Section 6.1 will be deemed a breach of the foregoing and (y) the Company’s or any Company Subsidiary’s failure to take any action prohibited by clauses (a) through (v) of the following sentence of this Section 6.1 will not be deemed a breach of the foregoing. Without limiting the foregoing, and subject to clauses (i) through (iv) above, the Company will not and will cause each Company Subsidiary not to:
(a) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional equity or any additional Rights other than the issuance of Company Common Stock in respect of the vesting or exercise of Company Options or Company Warrants outstanding as of the date hereof in accordance with their terms in effect as of the date of this Agreement;
(b) Except as contemplated by this Agreement(i) split, combine or reclassify any of its equity interests or issue or authorize or propose the Company shall notissuance of any other securities in respect of, and shall not in lieu of or in substitution for its equity interests, or (ii) repurchase, redeem or otherwise acquire, or permit any Company Subsidiary toto purchase, make redeem or propose to make otherwise acquire, any change in its dividend practices or policies or in its underwritingmembership, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of partnership or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure ScheduleRights, (y) in the ordinary course of business consistent with past practice, or (z) except as required by the terms of the Company Stock Plans and any related award agreements or plans already outstanding and in effect or Applicable Law, as of the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implementdate hereof in accordance with their terms as in effect on the date hereof, or commit to adopt satisfy any Tax withholding obligations of the holder thereof or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to as required by the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist securities outstanding on the date of this Agreement, Agreement or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other PersonCompany Benefit Plan;
(gc) Other (i) sell, lease, sublease, license, sublicense, waive, relinquish, transfer, pledge, abandon, assign, swap, mortgage or otherwise dispose of or subject to any Lien all or any material portion of its assets, businesses or properties other than in the ordinary course (A) any sales, leases, or dispositions of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services assets (other than with respect to Investment Assetsmaterial Intellectual Property) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies(B) any distributions expressly permitted under Section 6.1(d), (iC) sellany non-exclusive licenses or sublicenses of, leaseor other similar agreements with respect to, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or Intellectual Property granted in the aggregateordinary course of business, are material (D) any disclosure of trade secrets pursuant to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, confidentiality agreements in the case ordinary course of Liens, for Permitted Liens business; (as defined belowE) and Liens not individually in excess any abandonments or lapses of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth immaterial Intellectual Property in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets reasonable business judgement of the Company or any Company Subsidiary which took place since the last such report;
Subsidiary; or (jF) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization expiration of any gross capital loss or losses in an amount of $250,000 or more or Contracts by their terms (ii) an adverse impact on acquire (by merger or otherwise) or lease any assets or all or any portion of (or interests in) the surplus business or property of any other entity; provided that, for the avoidance of doubt, this shall not restrict purchases of products or supplies by the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than and its Subsidiaries in the ordinary course of business consistent with past practicebusiness; (iii) merge, the Company shall not, and shall not permit any Company Subsidiary to, consolidate or enter into any material contract or amend or waive other business combination transaction with any material provision of any material contract which would involve the payment Person (other than as permitted by the foregoing clause (ii)); or (iv) convert from a limited partnership, limited liability company or corporation, as the case may be, to any other business entity;
(d) make or declare dividends or distributions (whether in cash, assets, stock, other securities or otherwise) to (i) the holders of Company Common Stock or any Company Subsidiary or (ii) any other equityholders or Rights holders of $200,000 the Company or moreequityholders of any Company Subsidiary (other than any dividend or distribution from a wholly owned Company Subsidiary to the Company or to any other wholly owned Company Subsidiary);
(le) Other than in amend the ordinary course of business consistent with past practice, the Company shall not, and shall not permit Company’s or any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract Subsidiary’s Organizational Documents as in effect on the date of this Agreement;
(f) enter into any Company Specified Contract that is outside the ordinary course of business;
(g) modify, amend, terminate or assign, or waive or assign any rights under, any Company Specified Contract in any material manner;
(h) waive, release, assign, settle or compromise any material Proceeding or settle or compromise any Proceeding if such settlement or compromise (i) any controlling equity interest in any Person (other than Investment Assets)involves a material conduct remedy or material injunctive or similar relief, (ii) involves an admission of criminal wrongdoing by the Company or any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or creditCompany Subsidiary, (iii) has in any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown material respect a restrictive impact on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after or (iv) involving the date hereofpayment of more than $500,000;
(qi) The Company shall notimplement or adopt any change in its GAAP accounting principles, nor shall the Company permit any Company Subsidiary topractices or methods, take any actions that would other than as may be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Coderequired by GAAP;
(rj) Neither the Company nor any Company Subsidiary shall (i) make commence any clinical trial of which Parent has not been informed prior to the date of this Agreement, (ii) unless mandated by FDA or rescind any comparable Governmental Entity, discontinue, terminate or suspend any ongoing clinical trial or (iii) except as required by applicable Law, discontinue, terminate or suspend any ongoing IND-enabling preclinical study, in each case with respect to clauses (i) through (iii), without first consulting with Parent in good faith;
(k) sell, license, abandon or otherwise dispose of any material express Owned Intellectual Property (other than the licensing or deemed abandonment of Owned Intellectual Property in the ordinary course of business);
(l) disclose to any Person any material trade secret included in the Owned Intellectual Property or Licensed Intellectual Property other than pursuant to a non-disclosure agreement or other Contract restricting the disclosure and use of such trade secret (except for any such disclosures made as a result of publication of a Patent application filed by the Company or in connection with any required regulatory filing);
(m) (i) make, change, revoke, rescind, or otherwise modify any material election relating to Taxes, (ii) make settle or compromise any material Proceeding, audit or controversy relating to Taxes, (iii) amend any material Tax Return or file any Tax Return that was prepared in a request for a tax ruling or manner inconsistent with past practice, (iv) enter into a Tax Ruling (as defined below), settlement or compromise any closing agreement with respect to any material Tax, (v) surrender any right to claim a material Tax matterrefund, (vi) adopt, change, or otherwise modify any material Tax accounting period or any Tax accounting method, (iiivii) with respect request any extension or waiver of the limitation period applicable to any material Tax matter, change claim or assessment; or (viii) fail to pay any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income other material Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law(including any estimated Tax) that becomes due and payable;
(sn) Other except as required by applicable Law, expressly required or permitted by this Agreement or required by the terms of any Company Benefit Plan, (i) grant or commit to grant to any current or former director, officer, employee, contractor, consultant or service provider any increase in cash compensation, bonus or fringe or other benefits, other than with respect to employees below the level of vice president in the ordinary course of business in connection with the Company’s or any Company Subsidiary’s annual merit-based compensation review process, provided, that no such increase shall exceed 3% of an individual’s annual cash compensation, (ii) establish, adopt, enter into, terminate or amend, or take any action to accelerate the vesting or payment of any compensation or benefits under, any Company Benefit Plan, except for amendments to Company Benefit Plans that are health plans made in the ordinary course of business that do not materially increase the expense of maintaining such plan, (iii) grant or amend any equity or equity-based awards except amendments required by existing Company Stock Plans, (iv) enter into any employment, consulting, change in control, retention or severance agreement with, or grant or provide any severance, change in control, or retention payments or benefits to, any current or former director, officer, employee, contractor, consultant or service provider, (v) hire any officer, employee, contractor or consultant, other than individuals below the level of vice president, to replace employees who have departed, or terminate the employment or services of any officer, employee, contractor or service provider, or (vi) take any action to accelerate the vesting or payment date of any Company equity awards or accelerate the vesting or payment of any compensation or benefits, or the funding of any compensation or benefits, payable, provided or to become payable or provided under a Company Benefit Plan or otherwise;
(o) (A) incur, assume, guarantee or otherwise become liable for any Indebtedness (directly, contingently or otherwise), other than borrowings under the Existing Credit Agreement in the ordinary course of business, (B) redeem, repurchase, cancel or otherwise acquire any Indebtedness (directly, contingently or otherwise), (C) other than with respect to the Existing Credit Agreement, create any material Lien that is not a Permitted Lien on its property or the property of any Company Subsidiary in connection with any pre-existing Indebtedness, new Indebtedness or lease or (D) make or commit to make any capital expenditures except in the ordinary course of business;
(p) enter into any transaction or Contracts with any Affiliate or other Person that would be required to be disclosed by the Company under Item 404 of Regulation S-K of the SEC;
(q) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial dissolution or liquidation;
(r) make any loans, advances or capital contributions to, or investments in, any Person (other than the Company or any wholly owned Company Subsidiary or in connection with indemnification and advancement rights of the Company’s directors and officers) other than in the ordinary course of business and consistent with past practicebusiness;
(s) unless required by Law, neither recognize or certify any labor union, labor organization, works council, or group of employees as the Company nor bargaining representative for any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock employees of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; andits Subsidiaries;
(t) Neither implement or announce any employee layoffs, plant closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that could implicate the Company nor Worker Adjustment and Retraining Notification Act of 1988, as amended, or any Company Subsidiary shall agreesimilar Laws;
(u) waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor other than in writing the ordinary course of business; or
(v) agree or otherwise, commit to take any of the actions do anything prohibited by the foregoing clauses (a) through (s)u) of this Section 6.1. Nothing contained herein shall give to Parent or Merger Sub, directly or indirectly, rights to control or direct the operations of the Company prior to the Effective Time. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its operations.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or Except (i) for ----------------------------------- matters contemplated by the Transaction Documents and (ii) any transaction approved by a unanimous vote of the entire Board which would not, if the Governance Agreement were in effect at the time such vote is taken with respect to such transaction, be subject to TDF's Veto right pursuant to Section 4.01(b) of the Governance Agreement, from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
(a) The Closing Date the Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct its business only in the usual, regular and ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999previously conducted. In addition, and without limiting the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services togenerality of the foregoing, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as except for matters contemplated by the Transaction Documents, from the date of this AgreementAgreement to the Closing Date, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make do any of the following without the prior written consent of TDF (which consent shall not be unreasonably withheld, delayed or propose to conditioned):
(A) except for dividends or distributions that may be declared, set aside, paid or made in accordance with the terms of the Senior Preferred Stock, declare, set aside or pay any dividends on, or make any change other distributions in respect of, any of its dividend practices capital stock, other than dividends and distributions by a direct or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets indirect wholly owned subsidiary of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary toits parent, (iB) amend its charter split, combine or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate reclassify any of its covenants under capital stock or issue or authorize the Pooling Agreement (as defined below)issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (xC) modify any contract except with respect to the subject agreement dated as of February 2, 1998, between the Company and Xxxxx X. Xxxxxxx, any redemption of the foregoing clauses;
(e) The Company shall notSenior Preferred Stock on or before August 31, nor shall it permit 1998 or any Company Subsidiary toexercise of the Senior Preferred Warrants, issue purchase, redeem or sell any shares of or interests in, or rights of any kind to otherwise acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Personsecurities thereof or any rights, warrants or options to acquire any such shares or other securities;
(gii) Other than in the ordinary course issue, deliver, sell or grant (A) any shares of business consistent with past practiceits capital stock, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment AssetsB) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).voting securities,
Appears in 1 contract
Samples: Share Exchange Agreement (Crown Castle International Corp)
Conduct of Business by the Company. The Company covenants During the period from the date of this Agreement to the earlier of the Effective Time and agrees termination of this Agreement in accordance with its terms, except as to itself and set forth in Section 5.01 of the Company Subsidiaries that, at all times up Disclosure Schedule or as consented to and including the Effective Time, unless in writing in advance by Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or contemplated required by this Agreement or as set forth on Agreement, the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct carry on its business only in the ordinary course and consistent with past practice, in substantially the same manner as heretofore conducted since December 31each case in all material respects, 1999, and the Company and each Company Subsidiary shall use all reasonable best efforts to preserve intact the business of the Company, and to keep available the services of its present business organization current officers, employees and consultants and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings with it;
(b) Except . In addition to and without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the Effective Time and termination of this Agreement in accordance with its terms, except as contemplated by otherwise set forth in Section 5.01 of the Company Disclosure Schedule or as otherwise expressly permitted or required pursuant to this Agreement, the Company shall not, and shall not permit any Company Subsidiary of its Subsidiaries to, make without Parent’s prior written consent (which consent shall not be unreasonably withheld, conditioned or propose to delayed):
(a) (i) declare, set aside or pay any dividends on, or make any change other distributions (whether in cash, stock or property) in respect of, any of its dividend practices capital stock, other than dividends or policies distributions by a direct or indirect wholly-owned Subsidiary of the Company to its stockholders and quarterly dividends on the Company Common Stock in an amount not to exceed $0.225 per share of Company Common Stock per quarter, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its underwritingcapital stock, pricingor (iii) purchase, claimsredeem or otherwise acquire any shares of its capital stock or any of its other securities, risk retentionexcept for the redemption of the Company’s 8¼% Senior Notes due 2011 pursuant to the terms thereof or any rights, investmentwarrants or options to acquire any such shares or other securities, reinsurance practices and purchases, redemptions or policies other acquisitions of capital stock or other securities (A) required by the terms of the Company Equity Compensation Plans, (B) required by the terms of any plans, arrangements or Contracts existing on the date hereof between the Company or any of its Subsidiaries and any director or employee of the Company or any of its Subsidiaries (to the extent complete and accurate copies of which have been made available to Parent prior to the date hereof) or (C) the acquisition of Company Common Stock from a holder of a Company Equity Award in satisfaction of Tax withholding obligations or in payment of the exercise price;
(b) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any material respect; Lien any shares of its capital stock, any other voting securities or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities, or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units, including pursuant to Contracts as in effect on the date hereof, other than (i) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options or the settlement of RSUs or the distribution of Company Common Stock in respect of Deferred Equity Units (in each case outstanding on the date hereof and in accordance with their terms on the date hereof) and (ii) the grant of Deferred Equity Units (and the distribution of Company agrees that it will notify Parent and provide Parent with information Common Stock in reasonable detail regarding any material transactions (excluding investment transactions respect of Deferred Equity Units) in the ordinary course of business consistent with past practicepractice in accordance with, but including transactions involving and as required by, the securitization of Assets of Company’s Directors Deferred Compensation Plan as in effect on the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringdate hereof;
(c) The amend the Company shall not make Certificate or the Company By-laws or other comparable charter or organizational documents of any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPthe Company’s Subsidiaries;
(d) The Company shall not, and shall not permit any Company Subsidiary to, directly or indirectly acquire (i) amend its charter by merging or by-laws (unless contemplated hereby)consolidating with, by purchasing a substantial portion of the assets of, by making an investment in or capital contribution to, or by any other manner, any Person or division, business or equity interest of any Person or (ii) incur any individual Liability assets, rights or series properties except for (A) capital expenditures, which shall be subject to the limitations of related Liabilities in excess clause (g) below, (B) purchases of $200,000 other than inventory, raw materials or supplies in the ordinary course of business consistent with past practiceand (C) other acquisitions, (iii) incur any indebtedness for money borrowed investments or capital contributions not exceeding $1,000,000 individually or $5,000,000 in the aggregate for aggregate;
(e) sell, pledge, dispose of, transfer, abandon, lease, license, or otherwise encumber or subject to any Lien any material properties, rights or assets of the Company and the Company Subsidiaries in excess of $200,000 for or any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its AssetsSubsidiaries (including for this purpose any Real Property) except (i) sales, bulk pledges, dispositions, transfers, leases, licenses or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) encumbrances required to be effected prior to notifying Parentthe Effective Time pursuant to existing Contracts or non-material leases or licenses, enter into any material partnershipin each case, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practicesbusiness, and (viii) enter into any contract limiting the ability sales, pledges, dispositions, transfers, leases, licenses or encumbrances of (A) assets or properties (other than Real Property) of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), Subsidiaries having a value not to exceed $1,000,000 individually or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests $5,000,000 in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Scheduleaggregate, (yB) inventory or finished goods in the ordinary course of business consistent with past practice, or (zC) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, obsolete equipment and shall not permit any Company Subsidiary to other personal property consistent with past practice;
(f) (i) adopt redeem, repurchase, guarantee, prepay, defease, cancel, incur or implementotherwise acquire, or commit to adopt modify in any material respect the terms of, any indebtedness for borrowed money or implementassume, guarantee or endorse, or materially amendotherwise become responsible for, any collective bargainingsuch indebtedness of another Person, compensationissue or sell any debt securities or calls, employmentoptions, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement warrants or other employee benefit contract, plan or policy, (ii) enter into or materially amend rights to acquire any severance contract, (iii) increase in any manner debt securities of the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party Company or any of its Subsidiaries (other than (A) short-term borrowings in the ordinary course of business that can be prepaid at the Effective Time without premium or penalty, (B) the redemption of the Company’s 8¼% Senior Notes due 2011 pursuant to the terms thereof and (C) drawdowns under existing credit facilities made in the ordinary course of business so long as the aggregate amount drawn under all credit facilities at any time shall not be in excess of $600,000,000), (ii) make any loans or advances to any Person (other Person;
(g) Other than the extension of credit to customers in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which would result in the aggregate for principal amount of all loans and advances of the Company and the Company its Subsidiaries taken as a whole exceed exceeding $200,000500,000 or (iii) incur any obligations in respect of interest rate and currency obligation swaps, xxxxxx (including cash-flow xxxxxx) or similar arrangements, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice;
(g) make any capital expenditures exceeding 110% of the amounts set forth in the Company’s capital expenditure budget (a copy of which has been provided to Parent prior to the date hereof), other than in connection with the Company shall notreplacement of property subject to a good faith insurance claim;
(h) except as required by Law or any judgment by a court of competent jurisdiction, and shall not permit (i) pay, discharge, settle or satisfy any Company Subsidiary to, waive any rights with litigation or other proceedings before a value Governmental Entity or otherwise for an amount in excess of $100,000 500,000 individually or $5,000,000 in the aggregate, or that would restrict the future operations of the business of the Company and its Subsidiaries in any other material respect or (ii) waive or assign any claims or rights which are of material value to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with Company and its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit Subsidiaries taken as a cash-out thereofwhole;
(i) The (i) enter into, materially modify, terminate, cancel or fail to renew (to the extent that renewal is reasonably available to the Company shall notor its Subsidiary, and shall not permit as applicable) any Company Subsidiary toContract that is or would be a Material Contract, Lease or a Lessor Lease, or waive, release or assign any material rights or claims thereunder, except (other than pursuant with respect to the operation of separate accounts Material Contracts described in Section 3.09(a)(ii)) in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructureenter into, amendmodify, modify amend or otherwise affect terminate any Investment Asset Contract or waive, release or assign any contract relating thereto material rights or claims thereunder, which is material to the financial condition of the Companyif so entered into, any Company Subsidiarymodified, amended, terminated, waived, released or assigned would (A) have a Material Adverse Effect, or (B) impair in any material respect the ability of the Company and its Subsidiaries to conduct the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets business of the Company or any Company Subsidiary which took place since the last such reportas currently conducted;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in except as (i) the realization of any gross capital loss or losses in an amount of $250,000 or more required by applicable Law or (ii) an adverse impact required to comply with any Company Benefit Plan or other Contract as in effect on the surplus date hereof (to the extent complete and accurate copies of which have been made available to Parent prior to the date hereof), (A) adopt, enter into, terminate or amend (1) any Company Benefit Plan or (2) any other Contract (including any Change of Control Employment Agreement between the Company and any Key Personnel), plan or policy involving the Company or any of an its Subsidiaries and Company Subsidiary in an amount of $250,000 or more;
(k) Other than Personnel, except in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision practice with respect to employees of any material contract which would involve the payment by the Company or its Subsidiaries who are not Key Personnel or with respect to newly hired or promoted employees, (B) grant, create or award any bonus or incentive compensation, (C) grant any severance or termination pay or increase the compensation (including with respect to any Key Personnel who are set forth on Section 5.01(j)(C) of the Company Disclosure Schedule, the base salary and target annual incentive awards set forth therein) of any Company Subsidiary of $200,000 or more;
(l) Other than Personnel, except in the ordinary course of business consistent with past practice, practice with respect to employees of the Company shall notor its Subsidiaries who are not Key Personnel or with respect to promoted employees, and shall not permit (D) except as contemplated by Section 2.08, remove any existing restrictions in any Company Subsidiary toBenefit Plans or awards made thereunder, settle (E) take any action to fund or compromise any claim in any actionother way secure the payment of compensation or benefits under any Company Benefit Plan, proceeding (F) except as contemplated by Section 2.08, take any action to accelerate the vesting or investigation payment of any compensation or benefit under any Company Benefit Plan or awards made thereunder or (G) materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company Pension Plan or change the manner in which could result contributions to any Company Pension Plan are made or the basis on which such contributions are determined; provided that nothing in an expenditure for Section 5.01(i) shall limit the actions that are permissible under this Section 5.01(j) or the Schedule thereto;
(k) except as required by U.S. GAAP, revalue any material assets or material Liabilities of the Company and or any of its Subsidiaries or make any change in accounting methods, principles or practices;
(l) fail to use commercially reasonable efforts to cause the current insurance policies maintained by the Company or any of its Subsidiaries not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance companies of nationally recognized standing having comparable deductibles and providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums or less are in excess of $200,000full force and effect;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase adopt a plan or otherwise acquire, except pursuant to a contract in effect on the date agreement of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction complete or $1,000,000 per issuer partial liquidation or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingsdissolution;
(n) The Company shall notwithdraw or modify, and shall not permit in any Company Subsidiary to, enter into any newmanner adverse to Parent, or materially amend permit the withdrawal or terminate any existingsuch adverse modification of, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;14d-10 Approvals; or
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary toauthorize, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the foregoing actions prohibited by the foregoing set forth in clauses (a) through (s)n) of this Section 5.01.
Appears in 1 contract
Samples: Merger Agreement (Uap Holding Corp)
Conduct of Business by the Company. The Company covenants and agrees as During the period from the date of this Agreement to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or except as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall notuse its commercially reasonable best efforts to, and shall not permit cause each of the Company Subsidiaries to use its commercially reasonable best efforts to, carry on their respective businesses in the usual, regular and ordinary course, consistent with the requirements of law and past practice, and use their commercially reasonable best efforts to preserve intact their present business organizations, keep available the services of their present advisors, managers, officers and employees and preserve their relationships with customers, suppliers, licensors and others having business dealings with them and continue existing contracts as in effect on the date hereof (for the term provided in such contracts). Without limiting the generality of the foregoing, neither the Company nor any of the Company Subsidiaries will (except as expressly permitted by this Agreement or as contemplated by the Offer or the Transactions contemplated hereby or to the extent that Parent shall otherwise consent in writing):
(a) (i) declare, set aside or pay any dividend or other distribution (whether in cash, stock, or property or any combination thereof) in respect of any of its capital stock (other than dividends or other distributions declared, set aside or paid by any wholly-owned Company Subsidiary toconsistent with past practice), make (ii) split, combine or propose reclassify any of its capital stock or (iii) repurchase, redeem or otherwise acquire any of its securities, except, in the case of clause (iii), for the acquisition of Shares from holders of Options in full or partial payment of the exercise price payable by such holders upon exercise of Options outstanding on the date of this Agreement;
(b) authorize for issuance, issue, sell, deliver or agree or commit to make issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any change stock of any class or any other securities (including indebtedness having the right to vote) or equity equivalents (including, without limitation, stock appreciation rights) (other than the issuance of Shares upon the exercise of Options outstanding on the date of this Agreement in its dividend practices accordance with their present terms);
(c) acquire, sell, lease, encumber, transfer or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in dispose of any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in assets outside the ordinary course of business consistent with past practice, but including transactions involving which are material to the securitization of Assets Company or any of the Company Subsidiaries (whether by asset acquisition, stock acquisition or of any Company Subsidiary and transactions involving derivative securitiesotherwise), whether involving a purchase except pursuant to obligations in effect on the date hereof or sale, that it or any as set forth in Section 6.1 of the Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPDisclosure Schedule;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability amount of indebtedness for borrowed money, guarantee any indebtedness, guarantee (or series become liable for) any debt of related Liabilities in excess of $200,000 others, make any loans, advances or capital contributions, mortgage, pledge or otherwise encumber any material assets, create or suffer any material lien thereupon other than in the ordinary course of business consistent with past prior practice, (iiiii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of short-term indebtedness for borrowed money or other financial obligation of (iii) issue or sell debt securities or warrants or rights to acquire any Person other than debt securities, except, in the ordinary course case of business consistent with past practice, clause (viiii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (xii) modify any contract above, pursuant to credit facilities in existence on the date hereof in accordance with respect to the subject current terms of any of the foregoing clausessuch credit facilities;
(e) The Company shall notpay, nor shall it permit discharge or satisfy any Company Subsidiary toclaims, issue liabilities or sell obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than any shares of payment, discharge or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
satisfaction (f) Except (x) as set forth in the Company Disclosure Schedule, (yi) in the ordinary course of business consistent with past practice, or (zii) as contemplated by the Transactions;
(f) change any of the accounting principles or practices used by it (except as required by the terms of agreements or plans already generally accepted accounting principles, in effect or Applicable Lawwhich case written notice shall be provided to Parent and Acquisition Sub prior to any such change);
(g) except as required by law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt enter into, adopt, amend or implement, or commit to adopt or implement, or materially amend, terminate any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policyCompany Benefit Plan, (ii) enter into into, adopt, amend or materially amend terminate any severance contractagreement, arrangement, plan or policy between the Company or any of the Company Subsidiaries and one or more of their directors or officers, or (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than for normal increases in the ordinary course of business consistent with past practice, increase in any manner the Company shall notcompensation or fringe benefits of any director, and shall officer or employee or pay any benefit not permit required by any Company Subsidiary to, make any capital expenditures Benefit Plan or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken arrangement as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date as of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(qh) The Company shall notadopt any amendments to the Articles of Organization, nor shall the Company permit any Company Subsidiary toBylaws or the Rights Agreement, take any actions that would be reasonably likely to adversely affect except as expressly provided by the status terms of the Merger as a reorganization under Section 368 of the Codethis Agreement;
(r) Neither the Company nor any Company Subsidiary shall (i) make adopt a plan of complete or rescind any material express partial liquidation or deemed election relating to Taxesresolutions providing for or authorizing such a liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or reorganization (ii) make a request for a tax ruling other than plans of complete or enter into a Tax Ruling (as defined belowpartial liquidation or dissolution of inactive Company Subsidiaries), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(sj) Other than in the ordinary course of business and consistent with past practice, neither the Company nor settle or compromise any Company Subsidiary shall declare, set aside or pay any dividends or distributions litigation (whether in cash, stock or propertynot commenced prior to the date of this Agreement) in respect other than settlements or compromises of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; andlitigation where the
(tk) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, enter into an agreement to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. (a) The Company covenants and agrees as to itself that, between the date of this Agreement and the Effective Time or the earlier termination of this Agreement in accordance with Article X, except as (i) expressly contemplated or permitted by any other provision of this Agreement or any Transaction Document, (ii) set forth in Section 7.01 of the Company Subsidiaries thatDisclosure Schedule, at all times up to and including the Effective Timeor (iii) required by applicable Law, unless Parent SPAC shall otherwise consent in writing, writing (which consent shall not be unreasonably withheldconditioned, withheld or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:delayed):
(ai) The the Company shall, and shall cause each the Company Subsidiary Subsidiaries to, conduct its their business only in the ordinary course of business in a manner consistent with past practice; and
(ii) the Company shall, and in shall cause the Company Subsidiaries to, preserve substantially intact the same manner as heretofore conducted since December 31, 1999, business organization of the Company and the Company and each Company Subsidiary shall Subsidiaries, use all commercially reasonable efforts to keep available the services of the current officers, key employees and consultants of the Company and the Company Subsidiaries and to preserve intact its present business organization the relationships of the Company and preserve its regular services tothe Company Subsidiaries with customers, Suppliers, and maintain its relationships withdistributors, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having with which the Company or any Company Subsidiary has significant business dealings with it;relations.
(b) Except Without limitation of the foregoing, except as (i) expressly contemplated or permitted by any other provision of this AgreementAgreement or any Transaction Document, (ii) as set forth in Section 7.01 of the Company Disclosure Schedule, or (iii) as required by applicable Law, the Company shall not, and shall not permit any cause each Company Subsidiary not to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; between the date of this Agreement and the Company agrees that it will notify Parent and provide Parent Effective Time or the earlier termination of this Agreement in accordance with information in reasonable detail regarding Article X, directly or indirectly, do any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or following without the prior written consent of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
SPAC (c) The Company which consent shall not make any material change in accounting methods be unreasonably conditioned, withheld or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;delayed):
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter amend, supplement, restate or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series otherwise change the Organizational Documents of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(fii) Except issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any equity interests of the Company or any Company Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any such equity interests, or any other ownership interest (xincluding, without limitation, any phantom interest and/or so-called “participating financial instruments” pursuant to Section 2346, last paragraph, of the Italian Civil Code), of the Company or any Company Subsidiary;
(iii) sell, lease, or otherwise dispose of any of its material assets, rights or properties other than (i) sales of inventory and equipment, or sales of Hydrocarbons, in each case, in the ordinary course of business, or sales of or disposals of obsolete or worthless assets at the time of their schedule retirement; and (ii) exchanges or swaps of Oil and Gas Properties or other related assets in the ordinary course of business;
(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 equity interests;
(v) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its equity interests;
(vi) acquire (including, without limitation, by merger, consolidation, combination or acquisition of stock or any other business combination), directly or indirectly, any assets, securities, properties, interests or businesses of any corporation, partnership, other business organization or any division thereof, other than (i) pursuant to an agreement of the Company or any of the Company Subsidiaries in effect on the Execution Date that is made available to SPAC, (ii) acquisitions for which the consideration is less than $10,000,000 individually or $20,000,000 in the aggregate, or (iii) the exchange or swap of Oil and Gas Properties or other related asserts in the ordinary course of business;
(vii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, such obligations of any person, or make any loans, advances or capital contributions or intentionally grant any security interest in any of its assets; provided that notwithstanding anything to the contrary in this Section 7.01, the Company or any of its subsidiaries may enter into a reserve-based lending facility on arms-length terms, so long as set forth the maximum indebtedness incurred thereunder does not exceed $90,000,000;
(viii) incur any capital expenditure or obligations or liabilities in respect thereof, except (i) for those contemplated on Section 7.01(b)(viii) of the Company Disclosure Schedule, (yii) capital expenditures not contemplated on Section 7.01(b)(viii) of the Company Disclosure Schedule that are under $40,000,000 in the ordinary course of business consistent with past practiceaggregate, and (iii) capital expenditures to repair damage from casualty events or (z) as otherwise required by the terms of agreements or plans already in effect or Applicable Lawon an emergency basis, provided that the Company shall notnotify SPAC of such emergency expenditure as promptly as reasonably practicable;
(ix) enter into, and shall not permit renew or amend in any Company Subsidiary to material respect any Interested Party Transaction (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement contractual or other employee benefit contractarrangement, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any if existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Personwould have constituted an Interested Party Transaction);
(gx) Other materially amend (other than reasonable amendments in the ordinary course of business consistent or amendments made in connection with past practiceany Transactions) any accounting or cash management policies or procedures, the Company shall notother than as required by GAAP;
(xi) amend any material Tax Return; change any material method of Tax accounting; make, and shall not permit change or rescind any Company Subsidiary tomaterial election relating to Taxes; settle or compromise any material U.S. federal, make state, local or non-U.S. Tax audit, assessment, Tax claim or other controversy relating to Taxes; surrender any capital expenditures right to claim a Tax refund; or expenditures enter into any Tax sharing, allocation, indemnity or commitments for expenditures for the purchase or lease of any products or services or group of products or services similar agreement (other than with respect an agreement, contract or arrangement the primary purpose of which does not relate to Investment AssetsTaxes);
(xii) which in one close or a series materially reduce the activities of related transactions exceed $100,000 or which in the aggregate for the Company and the Company its Subsidiaries (taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a partywhole);
(hxiii) Other than adopt or enter into, amend or terminate any Employee Benefit Plan, except in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereofas required by law;
(ixiv) The Company shall not, and shall not permit make any Company Subsidiary to, other than pursuant material payment with respect to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such reportan Interested Party Transaction;
(jxv) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision new line of any material contract which would involve business outside of the payment businesses currently conducted by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess as of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;; or
(nxvi) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, binding agreement or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) otherwise make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise binding commitment with respect to any material Tax matterof the foregoing. Any action taken, or (iii) with respect omitted to any material Tax matterbe taken, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or its Subsidiaries to the extent that such act or omission is required to comply with any Company Subsidiary Law, order, directive, pronouncement or redeemguideline issued by a Governmental Authority providing for business closures, purchase “sheltering-in-place” or otherwise acquire other restrictions that relates to, or arises out of, COVID-19 or any other pandemic or public health crisis shall in no event be deemed to constitute a breach of this Section 7.01 and any action taken, or omitted to be taken, to the capital stock of extent reasonably determined by the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary to be necessary and advisable in response to COVID-19, after reasonably consulting with SPAC, shall agree, in writing or otherwise, not be deemed to take any constitute a breach of the actions prohibited by the foregoing clauses (a) through (s)this Section 7.01.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants Pending the Merger. During the period from the date of this Agreement and agrees as to itself and continuing until the earlier of the termination of this Agreement or the Effective Time the “Pre-Closing Period”), the Company Subsidiaries that, at all times up agrees (except to and including the Effective Time, unless extent that Parent shall otherwise consent in writing, which consent shall not be unreasonably withheldwithheld or delayed), or as otherwise expressly permitted or contemplated by this Agreement or as set forth to carry on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practicepractices and to use all commercially reasonable efforts consistent with past practices and policies to preserve intact its present business organization, but including transactions involving keep available the securitization services of Assets its present officers and key employees and consultants and preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others having business dealings with it, to the end that its goodwill and ongoing businesses would be unimpaired at the Effective Time. By way of amplification and not limitation, except as specifically contemplated by this Agreement or as specifically set forth in Section 5.01 of the Company Disclosure Schedule, the Company shall not, between the date of this Agreement and the Effective Time, directly or indirectly, do any of the following without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Certificate of Incorporation or Bylaws or equivalent organizational documents, except as may be (i) specifically necessary to accommodate the conversion of existing indebtedness into Company Series B Preferred Stock or exercise of existing warrants for Company Series B Preferred Stock or (ii) otherwise specifically contemplated by this Agreement or the Voting Agreement;
(b) issue, sell, pledge, dispose of, grant, encumber, authorize or propose the issuance, sale, pledge, disposition, grant or encumbrance of any Company Subsidiary and transactions involving derivative securitiesshares of its capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock or any other ownership interest (including, without limitation, any phantom interest), whether involving a purchase of the Company, except pursuant to the terms of options, warrants, preferred stock or saleconvertible indebtedness outstanding on the date of this Agreement; provided, however, that it the Company may issue promissory notes, either simple or convertible (provided that any Company Subsidiary such conversion may occur only prior to the Effective Time) into an existing class of capital stock, in a principal amount not to exceed $300,000, the terms of which provide that (i) payment of the outstanding principal and any accrued interest under any such note, or conversion of such note into shares of the Company’s capital stock, will constitute full repayment under such note and (ii) upon such repayment (including upon conversion of such note into shares of the Company’s capital stock), any security interest in the Company’s assets related thereto is seriously consideringterminated;
(c) The Company shall not make sell, lease, license, pledge, grant, encumber or otherwise dispose of any material change of its properties or assets which are material, individually or in accounting methods or practicesthe aggregate, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPits business;
(d) The Company shall notdeclare, 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;
(e) split, combine, subdivide, redeem or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or purchase or otherwise acquire, directly or indirectly, any shares of its capital stock, except from former employees, directors and shall not permit consultants in accordance with agreements providing for the repurchase of shares in connection with any Company Subsidiary totermination of service by such party and except to the extent required to complete the Merger;
(f) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest or any assets in any corporation, partnership, other business organization or any division thereof;
(g) institute or settle any Legal Proceeding;
(h) other than as specifically set forth in Section 5.01(b) regarding the issuance of promissory notes, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances, except for trade indebtedness or for advances to employees, in either case less than $2,000 in any individual instance in the ordinary course of business;
(i) amend its charter or by-laws (unless contemplated hereby), (ii) incur authorize any individual Liability or series of related Liabilities capital expenditure in excess of $200,000 25,000, individually or in the aggregate;
(j) enter into any lease or contract for the purchase or sale of any property, real or personal;
(k) waive or release any material right or claim;
(l) except as specifically contemplated by this Agreement, increase, or agree to increase, the compensation payable, or to become payable, to its officers or employees, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any of its directors, officers or other employees, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other Plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; provided, however, that the foregoing provisions of this subsection shall not apply to any amendments to employee benefit plans described in Section 3(3) of ERISA that may be required by Law;
(m) accelerate, amend or change the period of exercisability or the vesting schedule of restricted stock or Company Options granted under any option plan, employee stock plan or other agreement or authorize cash payments in exchange for any Company Options granted under any of such plans except as specifically required by the terms of such plans or any such agreement or any related agreement in effect as of the date of this Agreement and disclosed in the Company Disclosure Schedule;
(n) extend any offers of employment to potential employees, consultants or independent contractors or terminate any existing employment relationships;
(o) amend or terminate any Material Contract;
(p) enter into any contract or agreement material to the business, results of operations or financial condition of the Company;
(q) enter into, amend or terminate any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 5.01;
(r) other than in the ordinary course of business consistent with past practice, (iii) incur enter into any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 dayslicensing, (iv) agree to any mergerdistribution, consolidationOEM agreements, demutualizationsponsorship, acquisitionadvertising, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement merchant program or other similar reorganizationcontracts, arrangement agreements or business combinationobligations;
(s) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted, unasserted, contingent or otherwise), except in the ordinary course of business, consistent with past practice;
(t) take any action, with respect to accounting policies, principles or procedures;
(u) other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent and in accordance with past practicesprior practice, (vi) make or change any Tax or accounting election, change any annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any contract limiting closing agreement, settle any Tax claim or assessment relating to the ability Company, surrender any right to claim refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company, or take any other action or omit to take any action that would have the effect of increasing the Tax liability of the Company or Parent;
(v) (i) sell, assign, lease, terminate, abandon, transfer, permit to be encumbered or otherwise dispose of or, except in connection with the issuance of promissory notes as specifically contemplated by Section 5.01(b), grant any security interest in and to any item of the Company Intellectual Property, in whole or in part (and provided that, pursuant to Section 5.01(b), any such security interest must be terminable upon repayment or conversion of the indebtedness to which it relates), (ii) grant any license with respect to any Company Subsidiary Intellectual Property, other than a license of Software granted to engage customers of the Company to whom the Company licenses such Software in any the ordinary course of business, to compete (iii) develop, create or invent any Intellectual Property jointly with any Personthird party, or (iv) disclose, or allow to do business be disclosed, any confidential Company Intellectual Property, unless such Company Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against disclosure thereof;
(w) except as specifically contemplated by this Agreement, make (or become obligated to make) any bonus payments to any of its officers or employees;
(x) revalue any of its assets, including writing down the value of inventory or writing off notes or accounts receivable, except in the ordinary course of business;
(y) fail to maintain its equipment and other assets in good working condition and repair according to the standards it has maintained up to the date of this Agreement, subject only to ordinary wear and tear;
(z) permit any insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated without notice to Parent;
(aa) write off as uncollectible, or establish any extraordinary reserve with respect to, any Person account receivable or other indebtedness in excess of $10,000 with respect to a single matter, or in excess of $25,000 in the aggregate;
(bb) make any location loans, advances or to employ capital contributions to, or investments in, any Personother person or third party, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than travel loans or advances in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(ecc) The Company shall not, nor shall it permit knowingly take any Company Subsidiary to, issue action or sell fail to take any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided action that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required would cause there to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;; or
(pdd) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax mattertake, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, agree in writing or otherwiseotherwise to take, to take any of the actions prohibited by the foregoing clauses described in subsections (a) through (s)cc) above, or any action which is reasonably likely to make any of the Company’s representations or warranties contained in this Agreement untrue or incorrect on the date made (to the extent so limited) or as of the Effective Time.
Appears in 1 contract
Samples: Agreement and Plan of Merger and Reorganization (Blue Coat Systems Inc)
Conduct of Business by the Company. The Company covenants For the period commencing on the date hereof and agrees as to itself and ending on the Closing Date, the Company Subsidiaries thatshall, at all times up to except as expressly required hereby and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or except as otherwise consented to in advance in writing by the Purchaser, conduct the Business in the ordinary course consistent with past practice and shall, except as expressly permitted or contemplated required hereby and except as otherwise consented to in advance in writing by this Agreement or as set forth on the Company Disclosure SchedulePurchaser:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct use its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its present the goodwill and business organization of the Company, keep the officers and employees of the Company available to the Purchaser and preserve its regular services to, the relationships and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment goodwill of the Company with customers, brokersdistributors, suppliers suppliers, employees and all others other Persons having business dealings relations with itthe Company;
(b) Except as contemplated by this Agreement, the Company shall not, maintain its existence and shall not permit any Company Subsidiary to, make or propose to make any change good standing in its dividend practices or policies or jurisdiction of organization and in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securitieseach jurisdiction listed on Schedule 5.1(a), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change comply with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPall applicable Laws;
(d) The Company shall not, maintain in existing condition and shall not permit any Company Subsidiary to, repair (i) amend its charter or by-laws (unless contemplated herebyordinary wear and tear excepted), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting all buildings, offices, shops and other structures located on the ability of Real Property, and all equipment, fixtures and other tangible personal property located on the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesReal Property;
(e) The Company shall notnot authorize for issuance or issue and deliver any additional shares of its capital stock or securities convertible into or exchangeable for shares of its capital stock, nor shall it permit any Company Subsidiary to, or issue or sell grant any right, option or other commitment for the issuance of shares of its capital stock or of such securities, or split, combine or reclassify any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the its capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiarystock;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course not amend or modify its articles of business consistent with past practice, incorporation or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Personbylaws;
(g) Other than in the ordinary course of business consistent with past practicenot declare any dividend, the Company shall not, and shall not permit pay or set aside for payment any Company Subsidiary to, make any capital expenditures dividend or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract distribution or make any paymentpayment to any shareholder, officer or director or any Person with whom any such shareholder, officer or director has any direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary toindirect relation, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or salaries in the ordinary course of business and consistent with past practice;
(oh) The not create any subsidiary, acquire any capital stock or other equity securities of any corporation or acquire any equity or ownership interest in any business or entity;
(i) not dispose of or permit to lapse any ownership and/or right to the use of any patent, trademark, trade name, service mark, license or copyright of the Company shall(including any of the Company Intellectual Property), xx xispose of or disclose to any Person, any Confidential Information;
(j) protect, defend and maintain the ownership, validity and registration of the Company Intellectual Property, and shall cause each Company Subsidiary tonot allow any of the Registered Intellectual Property to be abandoned, maintain uninterrupted its existing insurance coverage forfeited, cancelled, expunged and/or dedicated to the public;
(k) not (i) create, incur or assume any indebtedness, (2) grant, create, incur or suffer to exist any Lien on the Assets that did not exist on the date hereof, (3) write-down the value of all types in effect any asset or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is availableinvestment on the books or records of the Company, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than depreciation and amortization in the ordinary course of business and consistent with past practice, neither (4) cancel any debt or waive any claim or right, (5) make any commitment for any capital expenditure to be made on or following the date hereof in excess of $10,000 in the case of any single expenditure or $20,000 in the case of all capital expenditures, (6) enter into any Contract which cannot be cancelled by the Company nor on notice of not longer than thirty (30) days and without liability or penalty of any kind, (7)enter into any Contract which imposes, or purports to impose, any obligations or restrictions on any of its Affiliates, or (8) settle or compromise any legal proceedings related to or in connection with the Business;
(l) not (i) increase in any manner the compensation of, or enter into any new bonus or incentive agreement or arrangement with, any of its employees, officers, directors or consultants, (10) pay or agree to pay any additional pension, retirement allowance or other employee benefit under any Company Subsidiary Benefit Plan to any of its employees or consultants, whether past or present, except, in each case, in the ordinary course of business to the extent consistent with past practice of the Company; provided, however, that the Company shall declarenot take any action described in this Section 7.1(l) with respect to (i) any manager, set aside officer or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock director of the Company or (ii) any Person whose annualized compensation is $60,000 or more or whose annual compensation for the twelve (12)-month period following the Expiration Date is expected to be $60,000 or more;
(m) except as required by Applicable Benefit Laws, not adopt, amend or terminate any Company Subsidiary Benefit Plan or redeemincrease the benefits provided under any Company Benefit Plan, purchase or otherwise acquire promise or commit to undertake any of the capital stock foregoing in the future;
(n) not enter into a collective bargaining agreement;
(o) not enter into any Employment Agreement;
(p) perform in all material respects all of its obligations under all Company Contracts and Licenses, and not default or suffer to exist any event or condition that with notice or lapse of time or both could constitute a default under any Company Contract or License (except those being contested in good faith);
(q) not increase any reserves for contingent liabilities (excluding any adjustment to bad debt reserves in the ordinary course of business consistent with past practice);
(r) maintain in full force and effect and in the same amounts policies of insurance comparable in amount and scope of coverage to that maintained as of the Company date hereof by or on behalf of the Company;
(s) continue to maintain its books and records in accordance with GAAP consistently applied and on a basis consistent with past practice and not make any Company Subsidiarychange in any accounting (or tax accounting) policy, practice or procedure of the Company;
(t) continue its current cash and inventory management practices; and
(tu) Neither the Company nor any Company Subsidiary shall agreenot authorize, in writing or otherwisecommit or agree to take, to take any of the actions prohibited by foregoing actions, which the foregoing clauses (a) through (s)Company is required not to take without the Purchaser’s prior written consent.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants (a) From and agrees as after the date hereof and prior to itself and the Company Subsidiaries that, at all times up to and including the Effective TimeTime or the date, unless if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as may be required by applicable Law, (ii) as may be consented to in writing by Parent shall otherwise consent in writing, (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise expressly permitted may be contemplated or contemplated required by this Agreement or (iv) as set forth on in Section 5.1 of the Company Disclosure Schedule:
(a) The , the Company shallcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and such entities shall cause each Company Subsidiary tonot take any action except in, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999of business, and the Company and each Company Subsidiary its Subsidiaries shall use all their reasonable best efforts to (A) keep available the services of current officers, key employees and consultants of the Company and each of its Subsidiaries, (B) preserve intact its present the Company’s business organization and preserve its regular services to, intact and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales existing relations and distribution organizations, underwriters, investment goodwill with customers, brokerssuppliers, suppliers distributors, creditors and lessors, (C) maintain insurance policies or replacement or revised policies in such amounts and against such risks and losses of the Company and its Subsidiaries as are currently in effect and (D) comply in all others having business dealings material respects with it;all applicable Laws; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Except as contemplated by this AgreementThe Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and prior to the earlier of the Effective Time and the Termination Date, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the Company Company: (i) shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries that is not directly or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment indirectly wholly owned by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside authorize or pay any dividends on or distributions make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or property) in respect of any capital stock other securities of the Company or any Company Subsidiary its Subsidiaries), except dividends and distributions paid or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited made on a pro rata basis by the foregoing clauses (a) through (s).Subsidiaries;
Appears in 1 contract
Conduct of Business by the Company. The Company covenants (a) During the period commencing with the execution and agrees as delivery of this Agreement and terminating upon the earlier to itself occur of the Effective Time and the termination of this Agreement in accordance its terms (the “Pre-Closing Period”), except as consented to in writing in advance by Buyer (which consent will not be unreasonably withheld, conditioned or delayed) or as otherwise permitted by this Section 5.8 or specifically required by this Agreement, the Company Subsidiaries thatwill (i) carry on its business in the Ordinary Course of Business and in compliance with Applicable Laws and (ii) preserve intact its current business organizations, keep available the services of its current officers, employees and consultants and preserve its relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with it with the intention that its goodwill and ongoing business will not be impaired at all times up the Closing in any material respect.
(b) In addition to, and without limiting the generality of, Section 5.8(a), during the Pre-Closing Period, except as consented to and including the Effective Time, unless Parent shall otherwise consent in writing, writing in advance by Buyer (which consent shall not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the Company shall not, and shall not permit any Company Subsidiary to, make or propose to make any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securitiesdelayed), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as specifically required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated required by this Agreement, enter into, adopt Law or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents as set forth in Section 5.8 of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practiceDisclosure Schedule, the Company shall not, and shall will not permit do or cause to be done any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;following:
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property); (B) adjust, split, combine or reclassify or otherwise amend the terms of any Company Options or Company RSU Awards, or issue or authorize the issuance of any other securities in respect of, in lieu of any capital stock or in substitution for such Company Options or Company RSU Awards (other than the issuance of Company Capital Stock pursuant to the exercise of Company Options outstanding on the date of this Agreement or any Company Subsidiary granted after the date of hereof not in violation of this Agreement) or redeem(C) issue, purchase purchase, redeem or otherwise acquire any Company Options or Company RSU Awards (other than the acquisition of Company Capital Stock in connection with the forfeiture of Company Options or repurchase of shares of Company Capital Stock issued under the Company Option Plan, pursuant to their terms as in effect on the date of this Agreement);
(ii) amend its Constitutive Documents;
(iii) acquire (by merger, consolidation or combination, or acquisition of stock or assets) any Person or division or assets thereof, or otherwise effect any merger, consolidation or reorganization of the capital stock Company, or effect any conversion or restructuring of any Company Capital Stock, purchase any securities of, voting interests in or any assets of any Person, other than acquiring or purchasing equipment or supplies in the Ordinary Course of Business;
(iv) sell, lease, transfer, license, leaseback or otherwise subject to any Lien or otherwise dispose of any of its properties or other assets or any interests therein (including securitizations);
(v) enter into any lease of real property or modify or amend any existing lease;
(vi) (A) waive, release, assign, settle, pay, discharge or satisfy any Action; (B) waive or assign any claims or rights; or (C) waive any benefits of, agree to modify in any respect, or fail to enforce, or consent to any matter with respect to which consent is required under, any standstill or similar Contract of the Company;
(vii) enter into any Contract that would constitute a Material Contract if it had been in existence on the Agreement Date, or amend, modify or consent to the termination of any Material Contract or the Company’s rights thereunder, or waive, release or assign any rights or claims thereunder;
(viii) enter into, modify, amend or terminate any Contract or waive, release, assign or fail to exercise or pursue any material rights or claims thereunder, which if so entered into, modified, amended, terminated, waived, released, assigned, or not exercised or pursued would reasonably be expected to (A) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (B) prevent or materially delay the consummation of the transactions contemplated by this Agreement;
(ix) except as expressly contemplated by any Employee Plan set forth on Section 3.17(a) of the Disclosure Schedule, (A) adopt, enter into, terminate or amend any collective bargaining agreement or Employee Plan or any benefit or compensation arrangement that would be an Employee Plan if it had been in existence on the Agreement Date; (B) increase the compensation, bonus or material fringe benefits of any Company SubsidiaryPersonnel; and(C) grant any bonus or incentive compensation to any Company Personnel,; (D) grant or pay any change in control, severance or termination pay or benefits to, or increase in any manner the change in control, severance or termination pay or benefits of, any Company Personnel; (E) take any action to accelerate the vesting or time of payment of any compensation or benefit, or the funding of any compensation or benefit, payable or to become payable to any Company Personnel; (F) hire any employee; or (G) terminate any employee, individual independent contractor or consultant other than for cause;
(tx) Neither commence an Action other than (A) for the routine collection of bills or (B) in such cases where it in good faith determines that failure to commence an Action would result in the material impairment of a valuable aspect of its business, provided that it consults with Buyer at least 10 days prior to the filing of such Action;
(xi) except as required by GAAP, revalue any of its properties or assets (whether tangible or intangible) or make any change in accounting methods, principles or practices (including for tax purposes);
(xii) make or change any election in respect of Taxes, change any annual Tax accounting period, adopt or change any accounting method in respect of Taxes, agree or settle any claim or assessment in respect of Taxes, file any amended Tax Return, enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any Tax, surrender any right to claim a Tax refund, or extend or waive the limitation period applicable to any claim or assessment in respect of Taxes;
(xiii) make any capital expenditures or commitments, capital additions or capital improvements in excess of $25,000 in the aggregate;
(xiv) fail to pay, or delay payment of, payables or other Liabilities when they become due and payable, other than payables and Liabilities that the Company nor is contesting in good faith by appropriate proceedings;
(xv) fully or partially liquidate, dissolve or effect a recapitalization or reorganization in any form of transaction;
(xvi) with respect to Intellectual Property, (A) sell, assign, license, sublicense, encumber, fail to maintain, transfer or otherwise dispose of any right, title or interest of the Company in any Company Subsidiary shall agreeIntellectual Property, (B) grant, extend, amend, or waive, cancel or modify any rights in writing or otherwiseto the Company Intellectual Property, (C) fail to use diligent efforts to file and prosecute any patent applications included in the Company Intellectual Property, (D) divulge, furnish to or make accessible any material trade secrets included in the Company Intellectual Property to any Third Party who is not subject to a written agreement to maintain the confidentiality of such trade secrets, (E) enter into any contractual obligation that would result in the grant to the Company of any right or license in the Intellectual Property of a third party or (F) amend, assign, terminate or fail to exercise any right of renewal or extension under any contractual obligation covering Company Intellectual Property;
(xvii) reduce the amount or scope of any insurance coverage provided by existing insurance policies of the Company;
(xviii) make loans or advances to, guarantees for the benefit of, or any investments in, any Person;
(xix) cancel any Indebtedness owed to the Company or waive any claims or rights of value, except in the ordinary course of business
(xx) authorize any of, or commit or agree to take any of the actions prohibited by the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company its Subsidiaries that, at all times up prior to and including the Effective Time, unless Parent shall otherwise consent has consented in writing, which consent shall not be unreasonably withheld, or and except as otherwise expressly permitted or contemplated by this Agreement or as set forth on the Company Disclosure Schedule:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present business organization and preserve its regular services to, and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except as contemplated by this Agreement, the business of the Company and its Subsidiaries shall be conducted only in the ordinary course of business consistent with past practices and, to the extent consistent therewith, the Company and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact, maintain existing relations and goodwill with Governmental Authorities, customers, suppliers, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of the Company and its Subsidiaries. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as otherwise expressly contemplated by this Agreement, (B) as Parent may consent in writing or (C) as set forth in Section 7.1 of the Company Disclosure Letter, the Company shall notnot directly or indirectly, and shall not permit any of its Subsidiaries to:
(a) amend the Company Articles of Incorporation or Company Bylaws or other applicable governing instruments or the organizational documents of any of its Subsidiaries;
(b) merge or consolidate with any Person or acquire (whether by acquisition of stock or assets, joint venture or otherwise) any Person or assets, in any single transaction (or series of related transactions) in excess of $100,000;
(c) (i) adjust, reclassify, split, combine, subdivide, authorize for issuance, issue or sell, pledge, dispose of or subject to any Lien any shares of any class of capital stock or other equity interest of the Company or any Subsidiary toor any options, make warrants, restricted stock, restricted stock units, convertible securities, stock appreciation rights, performance units, bonus stock, “phantom” stock rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or propose other rights of any kind to make acquire any such shares or any other equity interest, of the Company or any Subsidiary, other than issuances of shares of the Company Common Stock upon exercise or settlement of the Company Equity Awards outstanding on the date of this Agreement or (ii) repurchase, redeem or otherwise acquire any securities or equity equivalents except in the ordinary course of business in connection with (x) the cashless exercise of the Company Options in accordance with the Company Stock Plans, or (y) the settlement of the Company Equity Awards or the Company Options, in each case, in order to satisfy withholding or exercise price obligations in accordance with the Company Stock Plans;
(d) except to the extent required under any Company Benefit Plan as in effect on the date of this Agreement, (i) increase the compensation (including bonus opportunities) or fringe benefits of any of its directors, executive officers or employees (except in the ordinary course of business consistent with past practice with respect to employees who are not executive officers or parties to an employment or change in its dividend practices control agreement), (ii) grant any severance or policies or in its underwritingtermination pay, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions other than nominal severance to terminated employees in the ordinary course of business consistent with past practice, but including transactions involving (iii) make any new equity awards to any director, officer, employee or contractor, (iv) enter into or amend any employment, consulting, change in control or severance agreement or arrangement with any of its present, former or future directors, officers, employees or contractors, (v) establish, adopt, enter into, freeze or amend in any material respect or terminate any Company Benefit Plan or, except as otherwise provided herein, take any action to accelerate entitlement to compensation or benefits under any Company Benefit Plan or otherwise for the securitization of Assets of the Company or benefit of any Company Subsidiary and transactions involving derivative securitiespresent, former or future director, officer, employee or contractor, in each such case, except as otherwise permitted pursuant to clauses (i), whether involving a purchase (ii) or sale(iii) of this paragraph; provided that in no event may any tax gross-up or tax reimbursement feature be granted or made more favorable to any individual, that it (vi) pay, accrue or certify performance level achievements at levels in excess of actually achieved performance in respect of any component of an incentive-based award, or amend or waive any performance or vesting criteria or accelerate vesting, exercisability, distribution, settlement or funding under any Company Subsidiary is seriously considering;
(c) The Company shall not make Benefit Plan or otherwise for the benefit of any material change in accounting methods present, former or practicesfuture director, including without limitation any change with respect to establishment of reserves for unearned premiumsofficer, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, employee or any change in depreciation or amortization policies or rates adopted by itcontractor, except as required by Applicable Lawthe terms of the Company Benefit Plans as in effect on the date hereof, GAAP (vii) take any action with respect to salary, compensation, benefits or SAPother terms and conditions of employment that would result in the holder of an employment or change in control agreement having “good reason” (within the meaning of such agreement) to terminate employment and collect severance payments and benefits pursuant to such agreement, and (viii) terminate the employment of any holder of an employment or change in control agreement other than for “cause” (within the meaning of such agreement);
(de) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend declare, set aside, make or pay any dividend or other distribution or payment (whether in cash, equity interests or property or any combination thereof) with respect to any shares of any class of capital stock or other equity interests of the Company or any of its charter Subsidiaries (other than dividends or bydistributions by any Subsidiary to the Company or another wholly-laws owned Subsidiary) or (unless contemplated hereby)ii) redeem, purchase or otherwise acquire any of the Company’s or any of its Subsidiaries’ capital stock, or make any commitment for any such action other than pursuant to the Company Stock Plans as in effect on the date hereof;
(f) sell, lease, license, subject to a Lien, encumber (including by the grant of any option thereon) or otherwise surrender, relinquish or dispose of any of the assets or properties of the Company or its Subsidiaries (including capital stock of Subsidiaries) except for (i) sales of surplus or obsolete equipment, (ii) incur any individual Liability sales, leases, licenses or series other transfers between the Company and its wholly-owned Subsidiaries or between those Subsidiaries or (iii) sales, leases, licenses or other dispositions of related Liabilities assets or properties with a fair market value not in excess of $200,000 100,000;
(g) enter into any joint venture, partnership or other similar arrangement or make any loan, capital contribution or advance to or investment in any other Person (other than the Company or any wholly-owned Subsidiary of the Company);
(h) change any of the material accounting methods, policies, principles, procedures or practices except as may be required as a result of a change in GAAP;
(i) fail to maintain in full force without interruption its present insurance policies or comparable insurance coverage;
(i) make or rescind any material election relating to Taxes, including elections for any and all joint ventures, partnerships, limited liability companies or other investments where it has the capacity to make such binding election, (ii) settle or compromise any material Proceeding relating to Taxes, except to the extent of any reserve reflected on the Company’s consolidated balance sheet as of December 31, 2010 as filed with the SEC in its Annual Report on Form 10-K for the year then ended relating to such matter that was established in the ordinary course of business consistent with past practice, (iii) change in any material respect any of its methods of reporting any item for Tax purposes from those employed in the preparation of its Tax returns for the most recent taxable year for which a return has been filed, (iv) amend any material Return or file any material refund claim, (v) enter into a closing agreement with any taxing authorities, or (vi) give or request any waiver of a statute of limitations with respect to any Tax or Tax Return;
(k) settle or compromise any Proceeding, other than in the ordinary course of business consistent with past practice, or enter into any consent, decree, injunction or similar restraint or form of equitable relief in settlement of any material Proceeding or waive, release or assign any rights or claims;
(l) (i) create, incur or assume any Debt, issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any Debt or debt securities of another Person, enter into any “keep well” or other Contract to maintain any financial condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, except intercompany Debt among the Company and its Subsidiaries in the ordinary course of business consistent with past practice; (ii) repurchase, repay, defease or pre-pay any Debt, except (A) repayments in the ordinary course of business or (B) repayments of indebtedness by a Subsidiary of the Company to the Company or its wholly-owned Subsidiaries; or (iii) except with respect any Proceeding, pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary course of business consistent with past practice;
(i) mortgage, pledge, or suffer to exist any Liens (other than Permitted Liens) on, any asset or property, or (ii) pledge or otherwise encumber any shares of capital stock of the Company or any of its Subsidiaries;
(n) except for capital expenditures for items and in the amounts set forth in the capital budget included in Section 7.1(n) of the Company Disclosure Letter, make, authorize or enter into any commitment for any capital expenditures in excess of $100,000 in the aggregate;
(o) other than in the ordinary course of business consistent with past practice, (iiii) incur modify, amend or terminate or waive any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of rights under any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)Material Contract, or (x) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided new agreement that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have been a Company Material Adverse EffectContract if it were entered into at or prior to the date hereof;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof enter into, renew, extend, amend, grant a waiver under or terminate (other than terminations in accordance with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or their terms) any Company Subsidiary after Affiliate Transaction or transaction that would be a Company Affiliate Transaction if such transaction occurred prior to the date hereof;
(q) The Company shall notadopt or implement a plan of complete or partial liquidation, nor shall dissolution, restructuring, recapitalization or other reorganization of the Company permit or any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Codeits Subsidiaries;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire acquire, directly or indirectly, any of the capital stock of Parent or securities convertible or exchangeable into or exercisable for any shares of capital stock of Parent;
(s) subject to Section 7.3, take any action that would, or would reasonably be expected to, (i) result in any condition in Article VIII not being satisfied, (ii) prevent, materially delay or materially impede the Company consummation of the Merger or the other transactions contemplated by this Agreement or (iii) cause any Company Subsidiaryrepresentation in the applicable form of representation certificate contemplated by Section 8.2(d) hereof to be untrue as of the Closing; andor
(t) Neither the Company nor any Company Subsidiary shall agree, in writing agree or otherwise, commit to take do any of the actions prohibited by the foregoing clauses (a) through (s)foregoing.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and During the Company Subsidiaries thatperiod from the date of this Agreement until the earlier of the Offer Closing or the valid termination of this Agreement in accordance with Article VIII, at all times up to and including except with the Effective Time, unless prior written consent of Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or specifically contemplated by this Agreement or as set forth on in Section 5.01(a) of the Company Disclosure Schedule:
(a) The Letter, the Company shall, and shall cause each Company Subsidiary of its Subsidiaries to, conduct its business only carry on their respective businesses in the ordinary course consistent with past practice and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to comply with all applicable Laws and, to the extent consistent therewith, use commercially reasonable efforts to (i) keep available the services of their present officers and employees, (ii) preserve intact its present business organization their assets and technology, (iii) preserve its regular services to, and maintain its their relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having business dealings with it;
them, and (biv) Except maintain their franchises, rights and Permits. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Offer Closing, except with the prior written consent of Parent or as specifically contemplated by this AgreementAgreement or as set forth in Section 5.01(a) of the Company Letter, the Company shall not, and shall not permit any of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock or other equity or voting interests, except for dividends by a direct or indirect wholly owned Subsidiary of the Company to its parent, (B) split, combine or reclassify any of its capital stock or other equity or voting interests, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity or voting interests, other than any such transaction by a Company Subsidiary tothat remains a Company Subsidiary after consummation of such transaction, (C) purchase, redeem or otherwise acquire any shares of capital stock or any other securities of the Company or any of its Subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities (including any Company Stock Options and Company Stock Purchase Rights), except (1) cash paid in lieu of fractional shares, and (2) repurchases of Company Stock Purchase Rights pursuant to the terms of such Company Stock Purchase Rights or (D) amend, modify or change in any material respect the terms of any indebtedness of the Company or any of its Subsidiaries if the effect of such amendment, modification or change is to increase the interest rate thereof, change to an earlier date the maturity or payment dates thereof, add events of default or make any covenants of the Company or its Subsidiaries more onerous;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other equity or voting interests or any securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any such stock, interests or securities or any stock appreciation rights, phantom stock awards or other rights that are linked to the value of Company Common Stock or the value of the Company or any part thereof (other than the issuance of shares of Company Common Stock upon the exercise of Company Stock Options and Company Stock Purchase Rights or upon the conversion of the Company Convertible Notes);
(iii) amend or propose to make amend its certificate of incorporation or bylaws (or similar organizational documents), other than any change such transaction by a Company Subsidiary that remains a Company Subsidiary after consummation of such transaction;
(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing all or a substantial portion of the assets of, or by purchasing all or a substantial equity or voting interest in, or by any other manner, any business or person or division thereof or (B) any other assets other than assets having a fair market value of less than $5 million or assets acquired in the ordinary course of business consistent with past practice;
(v) sell, lease, sell and lease back, mortgage or otherwise subject to any Lien or otherwise dispose of any of its dividend practices properties or policies assets (including any shares of capital stock, equity or in its underwritingvoting interests or other rights, pricinginstruments or securities), claims, risk retention, investment, reinsurance practices or policies in any material respect; except (A) sales of inventory and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions used equipment in the ordinary course of business consistent with past practice, but (C) capital expenditures permitted by this Section 5.01, (D) Permitted Liens and Liens imposed by Law, (E) non-exclusive licenses permitted by clause (vi) below and (F) non-exclusive licenses and non-exclusive sublicenses granted in the ordinary course of business;
(vi) sell, transfer, license, encumber or otherwise dispose of any Intellectual Property, other than non-exclusive licenses granted in the ordinary course of business consistent with past practice;
(vii) (A) repurchase, prepay or incur any indebtedness, including transactions involving by way of a guarantee or an issuance or sale of debt securities, excluding conversions of the securitization of Assets Company Convertible Notes, or issue and sell 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 or (B) make any loans, advances or capital contributions to, or investments in, any other person, other than (1) the Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company direct or indirect wholly owned Subsidiary is seriously consideringof the Company, (2) loans and advances to employees in the ordinary course of business, (3) deposits, prepayments and other credits to suppliers made in the ordinary course of business, and (4) accounts receivable, prepaid royalties or expenses or notes receivable arising from the sale of goods in the ordinary course of business;
(cviii) The incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith, in excess of $5 million in any individual case or $25 million in the aggregate in any three-month period, other than capital expenditures made after prior consultation with Parent to address changes in product mix required by customers of the Company;
(ix) (A) pay, discharge, settle or satisfy any claims (including any claims of stockholders and any stockholder litigation relating to this Agreement or any transaction contemplated by this Agreement or otherwise), liabilities or obligations, other than, with respect to claims, liabilities and obligations relating that do not relate to patent infringement or trade secret violation, the payment, discharge, settlement or satisfaction in the ordinary course of business consistent with past practice, or as required by their terms as in effect on the date of this Agreement, of claims, liabilities or obligations reserved against in the Company’s most recent financial statements contained in the audited financial statements for the fiscal year ended December 31, 2006 (including the notes thereto) included in the Filed SEC Documents (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the ordinary course of business consistent with past practice, in each case, the payment, discharge, settlement or satisfaction of which does not include any material obligation (other than the payment of money) to be performed by the Company shall or its Subsidiaries following the Closing Date, or (B) waive any material benefits of, or agree to modify in any adverse respect, or fail to enforce, or consent to any matter with respect to which its consent is required under, any confidentiality, standstill or similar Contract to which the Company or any of its Subsidiaries is a party;
(x) enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee), or modify or amend in any material respect, or exercise any right to renew, any lease or sublease of real property;
(xi) modify or amend in any material respect, or accelerate, terminate or cancel, any Specified Contract, other than as may be necessary to comply with any such Specified Contract in connection with the transactions contemplated hereby;
(xii) enter into any Contract that is not in the ordinary course of business or consistent with past practice, or enter into or extend any Contract to provide products to customers that by its terms does not expire without penalty more than 90 days after the date of this Agreement or agree to provide or commit to provide to a customer under any Contract with such customer a greater volume of its products than the minimum number of products the Company is contractually required to provide under such existing Contract;
(xiii) except as required to ensure that any Benefit Plan in effect on the date of this Agreement is not then out of compliance with applicable Law or as specifically required pursuant to this Agreement (and, in each case, only to the extent the Compensation Committee has duly approved (by vote of members of the Compensation Committee who have been determined by the Board of Directors of the Company to be Independent Directors at the time of such approval) the arrangements resulting from such action as Employment Compensation Arrangements and taken all other actions necessary to satisfy the requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to such arrangements), (A) adopt, enter into, terminate, amend or modify any Benefit Plan, (B) increase in any manner the compensation or benefits of, or pay any bonus to, or grant any loan to, any Company Personnel, other than in the ordinary course of business consistent with past practice and pursuant to any a Benefit Agreement or Benefit Plan in effect on the date of this Agreement, (C) pay or provide to any Company Personnel any compensation or benefit not provided for under a Benefit Plan as in effect on the date of this Agreement other than the payment of base compensation in the ordinary course of business consistent with past practice, (D) grant or amend any awards under any Benefit Plan (including the grant of any equity or equity-based or related compensation) or remove or modify existing restrictions in any Benefit Plan or awards made thereunder, (E) grant or pay any severance, change in control, retention, termination or similar compensation or benefits to, or increase in any manner the severance, change in control, retention, termination or similar compensation or benefits of, any Company Personnel, (F) take any action to fund or in any other way secure the payment of compensation or benefits under any Benefit Plan, (G) take any action to accelerate the time of payment or vesting of any compensation or benefits under any Benefit Plan or (H) make any material change in accounting methods determination under any Benefit Plan that is inconsistent with the ordinary course of business or practices, including without limitation past practice;
(xiv) form any change with respect to establishment Subsidiary of reserves for unearned premiums, losses the Company;
(including without limitation incurred but not reported lossesxv) and loss adjustment expenses, enter into any Contract containing any restriction on the ability of the Company or any change of its Subsidiaries to assign all or any portion of its rights, interests or obligations thereunder, unless such restriction expressly excludes any assignment to Parent and any of its Subsidiaries in depreciation connection with or amortization policies following the consummation of the Offer, the Merger or rates adopted the other transactions contemplated by it, this Agreement;
(xvi) except as required by Applicable applicable Law, GAAP adopt or SAPenter into any collective bargaining agreement or other labor union Contract applicable to the employees of the Company or any of its Subsidiaries or terminate the employment of any Company Personnel who has an employment, severance or similar agreement or arrangement with the Company or any of its Subsidiaries;
(dxvii) The write down any of its material assets, including any Intellectual Property, or make any change in any financial accounting principle, method or practice, other than as required by GAAP or applicable Law or in the ordinary course of business consistent with past practice;
(xviii) except in the ordinary course of business consistent with past practice, take any action or fail to take any action which action or failure to act would result in the material loss or reduction in value of the Intellectual Property of the Company shall notand its Subsidiaries, and shall not permit taken as a whole;
(xix) enter into, extend or renew (A) any Company Subsidiary toContract or amendment thereof which, (i) amend its charter or by-laws (unless contemplated herebyif executed prior to the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.01(i), or (iiB) incur any individual Liability Contract or series amendment thereof that grants any person the right or ability to access, license or use all or a material portion of related Liabilities in excess the Intellectual Property of $200,000 the Company and its Subsidiaries, other than in the ordinary course of business consistent with past practice;
(xx) except for this Agreement, enter into (iiiA) incur any indebtedness Contract with any beneficial owner of any shares of Company Common Stock, or securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any shares of Company Common Stock, where such Contract provides for money borrowed consideration payable to such beneficial owner or any of its affiliates for shares of Company Common Stock tendered, or to be tendered, in the aggregate for Offer or (B) any Contract with any person where the amount payable thereunder is calculated based on the number of shares of Company and Common Stock tendered, or to be tendered, in the Company Subsidiaries in excess of $200,000 for Offer by such person or any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assetsaffiliates;
(xxi) make or change any material tax election, bulk change any annual tax accounting period, adopt or assumption reinsurance arrangement or other similar reorganizationchange any material method of tax accounting, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parentmaterially amend any tax returns, enter into any closing agreement, settle any material partnershiptax claim, joint venture audit or profit sharing contractassessment, other than contracts with insurance agents in the ordinary course of business consistent with past practicesor surrender any right to claim a material tax refund, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money offset or other financial obligation of reduction in tax liability; or
(xxii) authorize any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below)of, or (x) modify commit, resolve or agree to take any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etcforegoing actions.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s).
Appears in 1 contract
Samples: Merger Agreement (Komag Inc /De/)
Conduct of Business by the Company. The Company covenants and agrees as to itself and the Company Subsidiaries that, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or as otherwise expressly permitted or (a) Except for matters contemplated by this Agreement, from the date of this Agreement until the Share Acceptance (or as set forth on the Company Disclosure Schedule:
(a) The earlier termination of this Agreement pursuant to Article VII), the Company shall, and shall cause each Company Subsidiary to, (i) conduct its business only in light of the existing circumstances in the ordinary course course, including operating in compliance with Law and in substantially making all required filings with the same manner as heretofore conducted since December 31SEC, 1999, and the Company and each Company Subsidiary shall (ii) use all commercially reasonable efforts to preserve intact its present current business organization organizations, keep available the service of its current officers and employees and preserve its regular services to, and maintain its current relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers distributors, lessors, creditors, employees, contractors and all others having material business dealings with it, and (iii) permit reasonable, on-site access during normal business hours to a designated representative of Acquirer, which representative shall be Xxxx Xxxxxxx. Without limiting the generality of the foregoing, except as expressly provided in this Agreement or as consented to in writing by Acquirer (which consent will not be unreasonably withheld or delayed), prior to the earlier of (A) the Share Acceptance and (B) the termination of this Agreement pursuant to Article VII, neither the Company nor any Company Subsidiary will:
(i) amend its charter and organizational documents;
(ii) authorize for issuance, issue, sell, deliver or agree to commit to issue, sell or deliver any stock of any class or any other debt or equity securities or equity equivalents (including any stock options or stock appreciation rights), except for the issuance and sale of shares of Company Common Stock pursuant to the exercise of stock options or warrants outstanding on the date hereof;
(iii) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividends (whether in cash, stock or property or any combination thereof) in respect of its capital stock, make any other actual, constructive or deemed distribution in respect of its capital stock or otherwise make any payments to stockholders in their capacity as such, or redeem or otherwise acquire any of its securities or any securities of any of the Company Subsidiaries;
(iv) subject to Section 4.02, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company;
(v) (A) incur or assume any long-term or short-term indebtedness for borrowed money or issue any debt securities in each case, except for borrowings under existing lines of credit in the Company’s ordinary course of business, or materially modify or agree to any material amendment of the terms of any of the foregoing; (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except for obligations of the Company Subsidiaries incurred in the ordinary course of business; (C) make any loans, advances or capital contributions to or investments in any other Person (other than to a Company Subsidiary in the ordinary course of business); (D) pledge or otherwise create or suffer to exist any Lien (except for a Permitted Lien) with respect to shares of capital stock of the Company or the Company Subsidiaries or (E) mortgage or pledge any of its assets, tangible or intangible, or create or suffer to exist any other Lien thereon except for a Permitted Lien;
(vi) except as otherwise contemplated by this Agreement and except for increases in salary, wages and benefits granted to employees of the Company or Company Subsidiaries in conjunction with promotions or other changes in job status consistent with past practice (other than promotions or other changes in job status for officers and directors of the Company), or as required under existing agreements or otherwise made in the ordinary course of business, and except as may be required by applicable Law, enter into, adopt or amend or terminate (other than by expiration) any bonus, special remuneration, compensation, severance, stock option, stock purchase agreement, retirement, health, life, or disability insurance, severance or other employee benefit plan agreement, trust, fund or other arrangement for the benefit or welfare of any director, officer, employee or consultant in any manner or increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including the granting of stock appreciation rights or performance units); provided, however, that any incentive or bonus plans or programs for 2005 shall be permitted only to the extent set forth in Section 4.01(a)(vi) of the Company Disclosure Letter;
(vii) grant any severance or termination pay to any director, officer, employee or consultant, except payments made pursuant to written agreements outstanding on the date hereof, copies of which have been provided to Acquirer, or as required by applicable federal, state or local law or regulations;
(viii) (A) acquire, sell, lease, license, transfer or otherwise dispose of any material assets in any single transaction or series of related transactions having a fair market value in excess of $250,000 in the aggregate, other than sales of its products in the ordinary course of business; or (B) enter into any exclusive license, distribution, marketing, sales or other agreement;
(ix) except as may be required as a result of a change in applicable Law or in GAAP, change any of the accounting principles, practices or methods used by it;
(A) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other entity or division thereof or any material equity interest therein; (B) amend, modify or waive any material right under any Material Contract; or (C) authorize any capital expenditure or expenditures, (aa) in respect of the fourth quarter of 2004, in excess of already committed and budgeted expenditures plus an additional $200,000, and (bb) in respect of the first quarter of 2005 in excess of $1.8 million in the aggregate;
(xi) make or revoke any material tax election or settle or compromise any income tax liability in excess of $100,000;
(xii) fail to file any Tax returns when due (or, alternatively, fail to file for available extensions) or fail to cause such Tax returns when filed to be complete and accurate in all material respects;
(xiii) fail to pay any material Taxes or other material debts when due unless being contested in good faith and promptly disclosed to Acquirer;
(xiv) settle or compromise any pending or threatened suit, action or claim that (A) relates to the transactions contemplated hereby; (B) the settlement or compromise of which would involve more than $250,000 out of pocket expenses for the Company or any Company Subsidiary; or (C) that would reasonably be expected to result in a Company Material Adverse Effect;
(xv) make any material change in its practices, procedures or methods with respect to billing, collections or payment of accounts, including delaying payment of any accounts payable or accelerating the collection of any accounts receivable, except, with respect to delaying payment of any accounts payable or accelerating the collection of any accounts receivable, to the extent consistent with past practice; or
(xvi) agree in writing to take any of the actions described in Sections 4.01(a)(i) through (a)(xv).
(b) Except as contemplated otherwise permitted by this AgreementSection 4.02, the Company Company, on the one hand, and Acquirer on the other hand, shall not, and shall not permit any Company Subsidiary of their subsidiaries or affiliates to, make or propose to make take any change in its dividend practices or policies or in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees action that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously considering;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenseswould, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated herebyto, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of result in any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares representations and warranties of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as such party set forth in the Company Disclosure Schedulethis Agreement becoming untrue, (y) other than, in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation case of the transactions contemplated herebyrepresentations and warranties of the Company, and expenditures required for such failures to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, true and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets whichcorrect that, individually or in the aggregate, have not resulted and are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change any of its methods of reporting income or deductions for federal income tax purposes from those employed result in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(scondition in Section 6.01(c) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)not being satisfied.
Appears in 1 contract
Samples: Acquisition Agreement (Home Products International Inc)
Conduct of Business by the Company. The Company covenants For the period commencing on the date hereof and agrees as to itself and ending on the Closing Date, the Company Subsidiaries thatshall, at all times up to except as expressly required hereby and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, or except as otherwise consented to in advance in writing by the Purchaser, conduct the Business in the ordinary course consistent with past practice and shall, except as expressly permitted or contemplated required hereby and except as otherwise consented to in advance in writing by this Agreement or as set forth on the Company Disclosure SchedulePurchaser:
(a) The Company shall, and shall cause each Company Subsidiary to, conduct use its business only in the ordinary course and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all commercially reasonable efforts to preserve intact its present the goodwill and business organization of the Company, keep the officers and employees of the Company available to the Purchaser and preserve its regular services to, the relationships and maintain its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment goodwill of the Company with customers, brokersdistributors, suppliers suppliers, employees and all others other Persons having business dealings relations with itthe Company;
(b) Except as contemplated by this Agreement, the Company shall not, maintain its existence and shall not permit any Company Subsidiary to, make or propose to make any change good standing in its dividend practices or policies or jurisdiction of organization and in its underwriting, pricing, claims, risk retention, investment, reinsurance practices or policies in any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course of business consistent with past practice, but including transactions involving the securitization of Assets of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringeach jurisdiction listed on Schedule 4.1;
(c) The Company shall not make any material change in accounting methods or practices, including without limitation any change comply with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAPall applicable Laws;
(d) The Company shall not, maintain in existing condition and shall not permit any Company Subsidiary to, repair (i) amend its charter or by-laws (unless contemplated herebyordinary wear and tear excepted), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 other than in the ordinary course of business consistent with past practice, (iii) incur any indebtedness for money borrowed in the aggregate for the Company and the Company Subsidiaries in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 days, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting all buildings, offices, shops and other structures located on the ability of Real Property, and all equipment, fixtures and other tangible personal property located on the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (x) modify any contract with respect to the subject of any of the foregoing clausesReal Property;
(e) The Company shall notnot authorize for issuance or issue and deliver any additional shares of its capital stock or securities convertible into or exchangeable for shares of its capital stock, nor shall it permit any Company Subsidiary to, or issue or sell grant any right, option or other commitment for the issuance of shares of its capital stock or of such securities, or split, combine or reclassify any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the its capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiarystock;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course not amend or modify its articles of business consistent with past practice, incorporation or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Personbylaws;
(g) Other than in the ordinary course of business consistent with past practicenot declare any dividend, the Company shall not, and shall not permit pay or set aside for payment any Company Subsidiary to, make any capital expenditures dividend or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract distribution or make any paymentpayment to any shareholder, officer or director or any Person with whom any such shareholder, officer or director has any direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary toindirect relation, other than pursuant to the operation of separate accounts in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or salaries in the ordinary course of business and consistent with past practice;
(oh) The Company shallnot create any subsidiary, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage acquire any capital stock or other equity securities of all types any corporation or acquire any equity or ownership interest in effect any business or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effectentity;
(pi) The Company shall deliver to Parent as promptly as practicable after protect, defend and maintain the filing thereof with applicable regulatory authoritiesownership, unaudited or audited, as the case may be, SAP Statements filed by or on behalf validity and registration of the Company or Intellectual Property, and not allow any Company Subsidiary after of the date hereofRegistered Intellectual Property to be abandoned, forfeited, cancelled, expunged and/or dedicated to the public;
(qj) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall not (i) make create, incur or rescind assume any material express or deemed election relating to Taxesindebtedness, (ii) make a request for a tax ruling grant, create, incur or enter into a Tax Ruling (as defined below)suffer to exist any Lien on the Assets that did not exist on the date hereof, settlement or compromise with respect to any material Tax matter, or (iii) with respect to write-down the value of any material Tax matter, change any asset or investment on the books or records of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999Company, except as may be required by Applicable Law;
(s) Other than for depreciation and amortization in the ordinary course of business and consistent with past practice, neither (iv) cancel any debt or waive any claim or right, (v) make any commitment for any capital expenditure to be made on or following the date hereof in excess of $10,000 in the case of any single expenditure or $20,000 in the case of all capital expenditures, (vi) enter into any Contract which cannot be cancelled by the Company nor on notice of not longer than thirty (30) days and without liability or penalty of any kind, (vii)enter into any Contract which imposes, or purports to impose, any obligations or restrictions on any of its Affiliates, or (viii) settle or compromise any legal proceedings related to or in connection with the Business;
(k) not (i) increase in any manner the compensation of, or enter into any new bonus or incentive agreement or arrangement with, any of its employees, officers, directors or consultants, (ii) pay or agree to pay any additional pension, retirement allowance or other employee benefit under any Company Subsidiary Benefit Plan to any of its employees or consultants, whether past or present, except, in each case, in the ordinary course of business to the extent consistent with past practice of the Company; provided, however, that the Company shall declarenot take any action described in this Section 6.1(k) with respect to (i) any manager, set aside officer or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock director of the Company or (ii) any Person whose annualized compensation is $60,000 or more or whose annual compensation for the twelve (12)-month period following the Expiration Date is expected to be $60,000 or more;
(l) except as required by Applicable Benefit Laws, not adopt, amend or terminate any Company Subsidiary Benefit Plan or redeemincrease the benefits provided under any Company Benefit Plan, purchase or otherwise acquire promise or commit to undertake any of the capital stock foregoing in the future;
(m) not enter into a collective bargaining agreement;
(n) not enter into any Employment Agreement;
(o) perform in all material respects all of its obligations under all Company Contracts and Licenses, and not default or suffer to exist any event or condition that with notice or lapse of time or both could constitute a default under any Company Contract or License (except those being contested in good faith);
(p) not increase any reserves for contingent liabilities (excluding any adjustment to bad debt reserves in the ordinary course of business consistent with past practice);
(q) maintain in full force and effect and in the same amounts policies of insurance comparable in amount and scope of coverage to that maintained as of the Company date hereof by or on behalf of the Company;
(r) continue to maintain its books and records in accordance with GAAP consistently applied and on a basis consistent with past practice and not make any Company Subsidiarychange in any accounting (or tax accounting) policy, practice or procedure of the Company;
(s) continue its current cash and inventory management practices; and
(t) Neither the Company nor any Company Subsidiary shall agreenot authorize, in writing or otherwisecommit or agree to take, to take any of the actions prohibited by foregoing actions, which the foregoing clauses (a) through (s)Company is required not to take without the Purchaser’s prior written consent.
Appears in 1 contract
Conduct of Business by the Company. The Company covenants and agrees as to itself and Except for matters set forth in Section 5.01 of the Company Subsidiaries thatDisclosure Letter, at all times up to and including the Effective Time, unless Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld, as expressly required by applicable Law or as otherwise expressly permitted or contemplated required by this Agreement, during the period commencing from the date of this Agreement or as set forth on to the Company Disclosure Schedule:
earlier of (ai) The the termination of this Agreement in accordance with Article VIII and (ii) the Effective Time (such period, the “Pre-Closing Period”), the Company shall, and shall cause each Company Subsidiary to, conduct its business only in the usual, regular and ordinary course and in substantially the same manner as heretofore previously conducted since December 31, 1999, and the Company and each Company Subsidiary shall use all reasonable efforts to preserve intact its present current business organization organization, keep available the services of its current officers and preserve its regular services to, employees and maintain keep its relationships with, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment with customers, brokerssuppliers, suppliers licensors, licensees, distributors and all others having material business dealings with it;
(b) Except them. In addition, and without limiting the generality of the foregoing, except for matters set forth in Section 5.01 of the Company Disclosure Letter, as contemplated expressly required by applicable Law or otherwise expressly permitted or required by this Agreement, during the Pre-Closing Period, the Company shall not, and shall not permit any Company Subsidiary to, make do any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or propose to delayed):
(i) (A) declare, set aside or pay any dividends on, or make any change other distributions in respect of, any of its dividend practices capital stock, other than dividends and distributions by a direct or policies indirect wholly owned subsidiary of the Company to its parent, (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 shares of its underwritingcapital stock, pricingor (C) purchase, claims, risk retention, investment, reinsurance practices redeem or policies in otherwise acquire any material respect; and the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding any material transactions (excluding investment transactions in the ordinary course shares of business consistent with past practice, but including transactions involving the securitization of Assets capital stock of the Company or of any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, other than (1) the acquisition by the Company Subsidiary is seriously consideringof Company Common Stock in connection with the surrender of Company Common Stock by holders of Company Stock Options in order to pay the exercise price of the Company Stock Options, (2) the withholding of Company Common Stock to satisfy Tax obligations with respect to Company Stock Options or Company RSUs outstanding on the date of this Agreement and in accordance with their present terms and (3) the acquisition by the Company of Company Common Stock in connection with the forfeiture of Company Stock Options or Company RSUs outstanding on the date of this Agreement;
(cii) The issue, deliver, sell or grant any (A) shares of its capital stock, (B) securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares (including in connection with any stockholders rights plan) or (C) any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units, in the case of clauses (A), (B) and (C), other than the issuance of Company shall Common Stock upon the exercise of Company Stock Options or purchase rights under the Company ESPP or settlement of Company RSUs outstanding on the date of this Agreement and in accordance with their terms;
(iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents;
(iv) acquire or agree to acquire, in a single transaction or a series of related transactions, (A) whether by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, limited liability company, joint venture, association or other business organization or division thereof or any other person, or (B) any assets that are material, individually or in the aggregate, to the Company and the Company Subsidiaries, taken as a whole;
(v) except as required to ensure that any Company Benefit Plan or Company Benefit Agreement in effect on the date of this Agreement is not make out of compliance with applicable Law, or as required to comply with any material change Company Benefit Plan or Company Benefit Agreement in accounting methods effect on the date of this Agreement (and, in each case, only to the extent the HR Committee has duly approved (by vote of members of the HR Committee who have been determined by the Company Board to be “independent directors” within the meaning of Rule 14d-10(d)(2) under the Exchange Act at the time of such approval) the arrangements resulting from such action as an “employment compensation, severance or practices, including without limitation any change other employee benefit arrangement” within the meaning of Rule 14d-10(d)(1) under the Exchange Act and taken all other actions necessary to satisfy the requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(d) The Company shall not, and shall not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated herebysuch arrangements), (iiA) incur adopt, enter into, establish, terminate, amend or modify any individual Liability collective bargaining agreement, Company Benefit Plan or series Company Benefit Agreement, (B) increase in any manner the compensation or benefits of, or pay any bonus to, or grant any loan to, any Participant, (C) pay or provide to any Participant any compensation or benefit not provided for under a Company Benefit Plan or Company Benefit Agreement as in effect on the date of related Liabilities in excess of $200,000 this Agreement, other than the payment of base salary or base wages in the ordinary course of business consistent with past practice, (iiiD) incur grant or amend any indebtedness for money borrowed awards under any Company Benefit Plan (including the grant or amendment of any equity or equity-based or related compensation), or remove or modify existing restrictions in any Company Benefit Plan or Company Benefit Agreement or awards made thereunder, (E) grant or pay any severance, separation, change in control, retention, termination or similar compensation or benefits to, or increase in any manner the severance, separation, change in control, retention, termination or similar compensation or benefits of, any Participant, (F) enter into any trust, annuity or insurance Contract or similar agreement with respect to, or take any action to fund or in any other way secure the payment of compensation or benefits under, any Company Benefit Plan or Company Benefit Agreement, (G) take any action to accelerate the time of payment or vesting of any compensation or benefits under any Company Benefit Plan or Company Benefit Agreement or (H) make any material determination under any Company Benefit Plan or Company Benefit Agreement that is inconsistent with the ordinary course of business or past practice;
(vi) make any change in accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company, except as may have been required by a change in GAAP or SEC rules;
(vii) sell, lease (as lessor), license or otherwise dispose of (including through any “spin off”) or subject to any Lien any properties or assets that are material, individually or in the aggregate for aggregate, to the Company and the Company Subsidiaries Subsidiaries, taken as a whole, except sales and licenses of products (including service agreements) and sales of excess or obsolete assets, in excess of $200,000 for any such indebtedness having a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 dayseach case, (iv) agree to any merger, consolidation, demutualization, acquisition, redomestication, sale of all or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combination, other than a Superior Acquisition Proposal as permitted herein, (v) prior to notifying Parent, enter into any material partnership, joint venture or profit sharing contract, other than contracts with insurance agents in the ordinary course of business consistent with past practices, practice;
(viviii) enter into (A) incur any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Company Subsidiary, guarantee any debt securities of another person, enter into any “keep well” or other agreement to maintain any financial obligation statement condition of another person or enter into any arrangement having the economic effect of any Person of the foregoing; (B) make any loans, advances or capital contributions to, or investments in, any other person, other than (1) to or in the Company or any direct or indirect wholly owned subsidiary of the Company or (2) routine travel and business expense advances made to directors or employees; or (C) enter into any lease with a term in excess of one year (whether such lease is an operating or capital lease) other than operating leases and renewals of existing leases in the ordinary course of business consistent with past practice or any leases under which the obligations of the Company or any Company Subsidiary are not material to the Company and the Company Subsidiaries taken as a whole;
(ix) make or agree to make any capital expenditure or expenditures, except that the Company may make any capital expenditure: (A) in accordance with the Company’s capital expense budget set forth in Section 5.01(a)(ix) of the Company Disclosure Letter or (B) that, when added to all other capital expenditures made on behalf of all of the Company and the Company Subsidiaries since the date of this Agreement but not provided for in Section 5.01(a)(ix) of the Company Disclosure Letter, does not exceed $100,000 per month;
(x) make or change any material Tax election or settle or compromise any material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Filed Company SEC Documents or incurred in the ordinary course of business consistent with past practice; or (B) cancel any material indebtedness (individually or in the aggregate) or waive any claims or rights of substantial value;
(xii) (A) enter into a Company Material Contract other than a Contract involving a new order from a customer, (B) enter into any Contract involving a new order from a customer except if (1) such Contract is in the ordinary course of business consistent with past practice, (viii2) enter into such Contract does not include terms restricting, for a period exceeding three years, the Company’s or a Company Subsidiary’s right to modify the pricing charged to any contract customer or distributor for any service or to modify the pricing charged for the grant or renewal of any license or subscription arrangement for the use, maintenance or support of any Company Software, (3) such Contract does not obligate the Company or a Company Subsidiary to author, develop or modify source code for any Company Software or to accelerate development of any such source code and (4) such Contract does not grant to a party set forth on Section 5.01(a)(xii) of the Company Disclosure Letter or any of their respective affiliates any license or other right to acquire, license, use or distribute any Company Software or service, (C) amend, modify or waive any material right or remedy under any customer Contract that is reasonably likely to materially and adversely affect a Company Material Contract in a manner such the consummation Contract would not be permitted under Section 5.01(a)(xii)(B) if it were a new Contract at the time of the transactions contemplated herebysuch amendment, modification or waiver, (ixD) violate amend, modify or waive any material right or remedy under any customer Contract that is a Company Material Contract involving annual revenue in an amount in excess of its covenants $1,500,000, (E) amend, modify or waive any material right or remedy under the Pooling Agreement (as defined below)any Company Material Contract other than any Company Material Contract that is a customer Contract, or (xF) modify any contract with respect consent to the subject termination of any of the foregoing clausesCompany Material Contract;
(exiii) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which insurance policy naming the Company or any Company Subsidiary is as a partybeneficiary or a loss payee to be cancelled or terminated without notice to Parent;
(hxiv) Other adopt or enter into a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or for any other transaction that would preclude or be inconsistent in any material respect with, or hinder or delay in any material respect, the Transactions;
(xv) engage in any business, other than in the ordinary course business substantially as currently conducted and proposed to be conducted by the Company and the Company Subsidiaries;
(xvi) sell, lease, license, abandon (including by failing to pay any maintenance or annuity fees), let lapse or otherwise dispose of business any material Company Registered Intellectual Property, and the Company shall, consistent with past practice, continue to prosecute and/or file any necessary documents with any patent, trademark or intellectual property office to continue the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 prosecution or any other rights which are material to any contract or make any payment, direct or indirect, application of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereofmaterial Company Registered Intellectual Property;
(ixvii) The Company shall notcommence any action, and shall not permit suit, litigation, arbitration, proceeding (including any Company Subsidiary tocivil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other than pursuant Governmental Entity or any arbitrator or arbitration panel, except: (A) with respect to the operation of separate accounts routine matters in the ordinary course of business, consistent with existing strategies, ; (iB) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or such cases where the Company and the Company Subsidiaries taken as a whole, and, reasonably determines in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(j) The Company agrees good faith that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant to the operation of separate accounts involved in real estate in the ordinary course, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (ii) an adverse impact on the surplus of the Company or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract in effect on the date of this Agreement, (i) any controlling equity interest in any Person (other than Investment Assets), (ii) any non-publicly traded securities in excess of $1,000,000 per transaction or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required to be shown on Schedule BA of a Person's Annual Statement in excess of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancings;
(n) The Company shall not, and shall not permit any Company Subsidiary to, enter into any new, or materially amend or terminate any existing, reinsurance contracts or arrangements, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep commence suit would not have result in a Company Material Adverse Effect;material impairment of a valuable aspect of its business; or (C) in connection with a breach of this Agreement or otherwise in connection with the Offer or the Merger; or
(pxviii) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or authorize any Company Subsidiary after the date hereof;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (i) make or rescind any material express or deemed election relating to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matterof, or (iii) with respect to any material Tax matter, change any of its methods of reporting income commit or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;
(s) Other than in the ordinary course of business and consistent with past practice, neither the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock of the Company or any Company Subsidiary or redeem, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary shall agree, in writing or otherwise, agree to take any of the actions prohibited by of, the foregoing clauses (a) through (s)actions.
Appears in 1 contract
Samples: Merger Agreement (Accelrys, Inc.)
Conduct of Business by the Company. The Company covenants and agrees (a) During the Interim Period, except as to itself and required or permitted by this Agreement, as set forth in Section 5.1 of the Company Subsidiaries thatDisclosure Schedule, at all times up to and including or with the Effective Time, unless Parent shall otherwise prior written consent in writing, of Buyer (which consent shall not be unreasonably withheld, conditioned or as otherwise expressly permitted or contemplated by this Agreement or as set forth on delayed), the Company Disclosure Schedule:
shall (ax) The Company shall, and shall cause each Company Subsidiary to, conduct carry on its business only in the ordinary course consistent with past practice and in substantially the same manner as heretofore conducted since December 31, 1999, and the Company and each Company Subsidiary shall (y) use all commercially reasonable efforts to preserve intact its present business organization and preserve its regular services tomaterial business relationships. Without limiting the generality of the foregoing, and maintain its relationships withduring the Interim Period, policyholders, insurers, reinsurers, agents, sales and distribution organizations, underwriters, investment customers, brokers, suppliers and all others having business dealings with it;
(b) Except except as contemplated required or permitted by this Agreement, as set forth in Section 5.1 of the Company Disclosure Schedule, or with the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, and shall cause each of its Subsidiaries not permit any Company Subsidiary to, make directly or propose to make indirectly:
(i) amend its Organizational Documents (other than any change in its dividend practices immaterial amendment by a Subsidiary);
(ii) amalgamate, merge with or policies into or in its underwritingconsolidate with other Person;
(iii) adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, pricingdissolution, claims, risk retention, investment, reinsurance practices recapitalization or policies in any material respect; and other reorganization of the Company agrees that it will notify Parent and provide Parent with information in reasonable detail regarding or any material transactions of its Subsidiaries;
(excluding investment transactions iv) authorize, issue, split, combine, subdivide or reclassify any capital stock, or securities exercisable for, exchangeable for or convertible into capital stock, or other equity or voting interests, other than the issuance of capital stock, or securities exercisable for, exchangeable for or convertible into capital stock, (A) of the Company in the ordinary course of business consistent with past practice, but including transactions involving pursuant to any awards of SSARS that are outstanding as of the securitization date hereof or (B) of Assets a Subsidiary of the Company or of to any Company Subsidiary and transactions involving derivative securities), whether involving a purchase or sale, that it or any Company Subsidiary is seriously consideringother Acquired Company;
(cv) The Company except for Indebtedness that shall not be discharged prior to the Calculation Time, incur, create, assume or otherwise become liable for any Indebtedness of the type referred to in clause (a) or (b) of the definition thereof (or, to the extent relating thereto, clause (d) of the definition thereof);
(vi) except as required by Applicable Law or GAAP, make any material change in its accounting methods or practices, including without limitation any change with respect to establishment of reserves for unearned premiums, losses (including without limitation incurred but not reported losses) and loss adjustment expenses, or any change in depreciation or amortization policies or rates adopted by it, except as required by Applicable Law, GAAP or SAP;
(dvii) The Company shall notsell, and shall transfer, lease, offer to sell, abandon or make any other disposition of any of its assets, other than with a fair value not permit any Company Subsidiary to, (i) amend its charter or by-laws (unless contemplated hereby), (ii) incur any individual Liability or series of related Liabilities in excess of $200,000 500,000 individually;
(viii) other than in the ordinary course of business consistent with past practicebusiness, enter into, amend or modify in any material or adverse respect or assign (iiiother than to another Acquired Company) incur or terminate any indebtedness for money borrowed Material Contract or any Contract that would be a Material Contract if existing on the date hereof; provided, that no Acquired Company shall enter into, amend or modify in any material or adverse respect or assign (other than to another Acquired Company) any Material Contract, or any Contract that would be a Material Contract if existing on the aggregate for date hereof, to the Company and the Company Subsidiaries in excess of $200,000 for any extent such indebtedness having Contract is or would be a maturity of 90 days or less or $200,000 for any such indebtedness having a maturity of more than 90 daysMaterial Contract pursuant to clauses (ii), (iv), (v), (vi) agree to any or (xi) of Section 3.8(a) or of the sort set forth on Section 5.1(a)(viii) of the Company Disclosure Schedule;
(ix) acquire, including by way of merger, consolidation, demutualization, acquisition, redomestication, sale consolidation or purchase of all any capital stock or a substantial portion of its Assets, bulk or assumption reinsurance arrangement or other similar reorganization, arrangement or business combinationassets, other than a Superior Acquisition Proposal as permitted herein, the purchase of (vA) prior to notifying Parent, enter into any material partnership, joint venture assets or profit sharing contract, other than contracts with insurance agents securities on behalf of clients in the ordinary course of business consistent with past practices, (vi) enter into any contract limiting the ability of the Company or of any Company Subsidiary to engage in any business, to compete with any Person, to do business with any Person or in any location or to employ any Person, (vii) enter into any contract relating to the direct or indirect guarantee of any obligation of any Person in respect of indebtedness for borrowed money or other financial obligation of any Person other than in the ordinary course of business consistent with past practice, (viii) enter into any contract that is reasonably likely to materially and adversely affect the consummation of the transactions contemplated hereby, (ix) violate any of its covenants under the Pooling Agreement (as defined below), or (xB) modify any contract with respect to the subject of any of the foregoing clauses;
(e) The Company shall not, nor shall it permit any Company Subsidiary to, issue or sell any shares of or interests in, or rights of any kind to acquire any shares of or interests in, or to receive any payment based on the value of, the capital stock of or other equity interests in or any securities convertible into shares of any capital stock of or other equity interests in the Company or any Company Subsidiary;
(f) Except (x) as set forth in the Company Disclosure Schedule, (y) in the ordinary course of business consistent with past practice, or (z) as required by the terms of agreements or plans already in effect or Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to (i) adopt or implement, or commit to adopt or implement, or materially amend, any collective bargaining, compensation, employment, consulting, pension, profit sharing, bonus, incentive, group insurance, termination, retirement or other employee benefit contract, plan or policy, (ii) enter into or materially amend any severance contract, (iii) increase in any manner the compensation of, or enter into any contract relating to the borrowing of money by, its directors, officers or other employees, except pursuant to the terms of agreements or plans as currently in effect provided that in no event shall any such individual increase in annual compensation exceed $100,000 per year, (iv) increase by more than 5% the aggregate number of its employees, (v) pay or agree to pay any pension, retirement allowance or other employee benefit not required by the current terms of any existing plan, agreement or arrangement to any director, officer or other employee, whether past or present, (vi) voluntarily recognize, or involuntarily become subject to, any labor organization or any other Person as a collective bargaining representative of one or more bargaining units comprising a material number of employees, or (vii) other than obligations that arise by operation of law or under the by-laws of a party as they exist on the date of this Agreement, or as contemplated by this Agreement, enter into, adopt or increase any indemnification or hold harmless arrangements with any directors, officers or other employees or agents of such party or any of its Subsidiaries or any other Person;
(g) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, make any capital expenditures or expenditures or commitments for expenditures for the purchase of an interest in a proprietary seed capital account or lease of any products or services or group of products or services (other than with respect to Investment Assets) which in one or a series of related transactions exceed $100,000 or which in the aggregate for the Company and the Company Subsidiaries taken as a whole exceed $200,000, except for expenditures relating to this Agreement and the consummation of the transactions contemplated hereby, and expenditures required to be made pursuant to existing contracts to which the Company or any Company Subsidiary is a party;
(h) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, waive any rights with a value in excess of $100,000 or any other rights which are material to any contract or make any payment, direct or indirect, of any Liability in excess of $100,000 before the same comes due in accordance with its terms, in each case, including, but not limited to, any provision of any Insurance Contract to permit a cash-out thereof;
(i) The Company shall not, and shall not permit any Company Subsidiary to, other than pursuant to the operation of separate accounts portfolio in the ordinary course of business, consistent with existing strategies, (i) sell, lease, mortgage, encumber or otherwise grant any interest in or dispose of any of its Assets which, individually or in the aggregate, are material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in addition, in the case of Liens, for Permitted Liens (as defined below) and Liens not individually in excess of $100,000 and not aggregating in excess of $200,000 or (ii) restructure, amend, modify or otherwise affect any Investment Asset or any contract relating thereto which is material to the financial condition of the Company, any Company Subsidiary, or the Company and the Company Subsidiaries taken as a whole, and, in either case described in clauses (i) and (ii), only in accordance with the statement of investment policy set forth in the Company Disclosure Schedule; and the Company shall furnish to Parent a monthly report, in detail reasonably acceptable to Parent, of all such transactions or other changes (other than changes in market values or ordinary course changes such as interest payments, maturities, etc.) affecting Investment Assets of the Company or any Company Subsidiary which took place since the last such report;
(jx) The Company agrees that it shall not, nor shall it permit any Company Subsidiary to, other than pursuant except (A) to the operation of separate accounts involved in real estate in the ordinary courseextent required by Applicable Law, consistent with existing strategies, make any equity real estate investments (other than through restructuring or foreclosure or pursuant to commitments existing at the date hereof or to protect the value of existing investments in the exercise of reasonable business judgment) and that neither the Company nor any Company Subsidiary shall take any action, other than in the exercise of reasonable business judgment and following discussion with Parent, which results, individually or in the aggregate, in (i) the realization of any gross capital loss or losses in an amount of $250,000 or more or (iiB) an adverse impact on to the surplus of the Company extent required by any Plan, policy or of an Company Subsidiary in an amount of $250,000 or more;
(k) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, enter into any material contract or amend or waive any material provision of any material contract which would involve the payment by the Company or any Company Subsidiary of $200,000 or more;
(l) Other than in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any Company Subsidiary to, settle or compromise any claim in any action, proceeding or investigation which could result in an expenditure for the Company and the Company Subsidiaries in excess of $200,000;
(m) The Company shall not, and shall not permit any Company Subsidiary to, purchase or otherwise acquire, except pursuant to a contract Contract as in effect on the date of this Agreement, (i1) with respect to any controlling equity interest employee of an Acquired Company, grant any (x) increase in the compensation, commissions or benefits, including severance pay, or (y) grant or promise to pay or accelerate the payment or vesting of, conditionally or otherwise any Person bonus, equity-based awards or benefits; (2) hire or terminate (other than Investment Assetsfor cause) the employment of any officer or employee having a title that is at or above Vice President; (3) grant any equity award or other long-term incentive compensation; or (4) enter into any agreement which provides for, or amend any agreement to provide for, payment in connection with a change in control (either alone or together with any other event);
(xi) except, for the avoidance of doubt, with respect to any Combined Tax Returns, make, change, or revoke any material Tax election, change any material method of Tax accounting, file any material amended Tax Return, 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. Applicable Law), surrender any right to claim a material Tax refund, or take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected (i) to prevent the Combination from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) any non-publicly traded securities result in excess gain recognition to Parent or one or more of $1,000,000 per transaction its Affiliates pursuant to Section 367 of the Code or $1,000,000 per issuer or credit, (iii) any investments in fixed income securities rated in NAIC (as defined below) Class 4, 5 or 6, non-publicly traded equity securities or Assets required cause the Company to be shown on Schedule BA treated as an “expatriated entity” within the meaning of Section 7874(a)(2) of the Code as a Person's Annual Statement in excess result of $250,000 per transaction or $250,000 per issuer or credit, or (iv) any real property or mortgage investments except in the ordinary course of managing the existing portfolio of real property and mortgage investments, including foreclosing purchase money mortgages, extensions and refinancingsTransactions;
(nxii) The settle any Proceeding, other than settlements that result solely in monetary obligations of the Company shall notor its Subsidiaries (without the admission of wrongdoing or a nolo contendere or similar plea, and shall not permit any Company Subsidiary to, enter into any newthe imposition of injunctive or other equitable relief, or materially amend restrictions on the future activity or terminate any existingconduct, reinsurance contracts or arrangementsby, except in accordance with existing reinsurance agreements or in the ordinary course of business and consistent with past practice;
(o) The Company shall, and shall cause each Company Subsidiary to, maintain uninterrupted its existing insurance coverage of all types in effect or procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies if such coverage is available, except for insurance coverage the failure to so keep would not have a Company Material Adverse Effect;
(p) The Company shall deliver to Parent as promptly as practicable after the filing thereof with applicable regulatory authorities, unaudited or audited, as the case may be, SAP Statements filed by or on behalf of the Company or any of its Subsidiaries) involving payment by the Company Subsidiary after or any of its Subsidiaries in an amount not greater than $2,000,000 individually or $10,000,000 in the date hereofaggregate;
(q) The Company shall not, nor shall the Company permit any Company Subsidiary to, take any actions that would be reasonably likely to adversely affect the status of the Merger as a reorganization under Section 368 of the Code;
(r) Neither the Company nor any Company Subsidiary shall (ixiii) make or rescind incur any material express capital expenditures in excess of $13,000,000 in the aggregate; or
(xiv) agree or deemed election relating commit to Taxes, (ii) make a request for a tax ruling or enter into a Tax Ruling (as defined below), settlement or compromise with respect to any material Tax matter, or (iii) with respect to any material Tax matter, change do any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ending December 31, 1999, except as may be required by Applicable Law;foregoing.
(sb) Other than Nothing contained in Section 5.1(a) is intended to give Buyer the ordinary course of business and consistent with past practice, neither right to control or direct the Company nor any Company Subsidiary shall declare, set aside or pay any dividends or distributions (whether in cash, stock or property) in respect of any capital stock operations of the Company or any Company Subsidiary or redeemof its Subsidiaries prior to the Closing. Prior to the Closing, purchase or otherwise acquire any of the capital stock of the Company or any Company Subsidiary; and
(t) Neither the Company nor any Company Subsidiary and its Subsidiaries shall agreeexercise complete control and supervision over their respective operations, in writing or otherwise, to take any of the actions prohibited by the foregoing clauses (a) through (s)as applicable.
Appears in 1 contract
Samples: Merger Agreement (Invesco Ltd.)
