Conduct of Company Business Pending the Merger. 36 (a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts to, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, conduct its businesses in the Ordinary Course, preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition and any such actions taken pursuant to the prior proviso. (b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, the Company shall not, and shall not permit its Subsidiaries to: (i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereof; (ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company; (iii) amend or propose to amend the Company’s Organizational Documents or the Organizational Documents of any Company Subsidiary; (iv) (A) merge, consolidate, combine or amalgamate with any Person or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof; (v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) other than (A) pursuant to a Contract of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Code; (vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company; (vii) change in any material respect their material accounting principles, practices or methods, except as required by GAAP or applicable Law; (viii) (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxes, (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than in the Ordinary Course); (ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law; (x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; (xi) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company Contract; (xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries; (xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10; (xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable); (xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; (xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied; (xvii) make any loans, advances or capital contributions to, or investments in, any other Person; (xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or (xix) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (Cleanspark, Inc.), Merger Agreement (Cleanspark, Inc.)
Conduct of Company Business Pending the Merger. 36
(a) Except The Company agrees that, except (i) as set forth on Schedule in Section 6.1(a) of the Company Disclosure Letter, (ii) for any transaction, contract or other business arrangement entered into or agreed by any Person set forth on Section 4.1(c) of the Company Disclosure Letter, including but not limited to any issuance of securities by such Person or any sale or acquisition of any assets by such Person, (iii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, Law or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts tothe Company shall, and shall cause each of its Subsidiaries to to, use its commercially reasonable efforts to, to (1) conduct its businesses (I) in the Ordinary Course, preserve substantially intact its present ordinary course of business organization, goodwill in all material respects and assets, comply (II) in compliance in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of (2) preserve substantially intact its current officers and employees present business organization and preserve its existing relationships with its material customerskey business relationships, suppliersvendors, licensors, licensees, distributors, lessors counterparties and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentemployees; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (iv) as set forth on the corresponding subsection of Schedule in Section 6.1(b) of the Company Disclosure Letter, (iiw) as expressly permitted or required by this Agreement, (x) for any transaction, contract or other business arrangement entered into or agreed by any Person set forth on Section 4.1(c) of the Company Disclosure Letter, including but not limited to any issuance of securities by such Person or any sale or acquisition of any assets by such Person, (y) as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (ivz) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, the Company shall not, and shall not permit any of its Subsidiaries to:
(i) (A) authorize, declare, set aside or pay any dividends on, or make any other distribution (whether in cash, stock, property or otherwise) in respect of any outstanding capital stock of, or other equity interests in, the Company or any of its Subsidiaries, except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly-owned Subsidiary of the Company); or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company, except as required by the Organizational Documents of the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on Plan or any Company Warrant, in each case, existing as of the date hereof (or granted following the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, Agreement in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant this Agreement, as applicable, as of the date hereof);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interestsinterests (including the grant of new equity-based awards under the Company Plans), other than: (A) than the delivery issuance of Company Common Capital Stock upon the vesting of, exercise of or lapse exchange of any restrictions on any Company Equity Awards Warrants or Company Warrants outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants Convertible Notes outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;
(iii) (A) amend or propose to amend the Company’s Organizational Documents or (B) amend or propose to amend the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another entity in which the Company or its Subsidiaries own an interest, whether direct or indirect, or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), ) any assets or any business or any corporation, partnership, association or other business organization or division thereof, in each case other than transactions between the Company and a Subsidiary of the Company or between or among Subsidiaries of the Company;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) other than (A) pursuant to a Contract of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codeassets;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material its accounting principles, practices or methodsmethods in a manner that would materially affect the consolidated assets, liabilities or results of operations of the Company or any of its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) make (or change any Tax election, adopt or change any Tax accounting period or material method of Tax accounting, file any amended Tax Return, settle or compromise any liability for Taxes or any Tax audit or other than in the Ordinary Course), change or revoke any material election proceeding relating to Taxes, (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing or similar agreement with respect to material Taxesany Taxing Authority, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount material refund of any such settlements Taxes or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an any extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than in the Ordinary Course)limitations;
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current directors, officers or former any other employees (including Business Employees) other than in the ordinary course of business; (B) establish, grant or provide any new cash bonuses or any new cash bonus plan, program, arrangement, agreement or practice for any directors, officers, employees (including Business Employees), consultants or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Employee Benefit Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not Agreement if such amendment would have the effect of enhancing or materially increasing any benefits thereunder; (D) accelerate the vesting, payment or settlement of any compensation or benefits thereunder benefit; or otherwise resulting in increased costs (E) hire any new employees other than to fill existing vacancies or as necessary to maintain the Company ordinary course of business, or its Subsidiaries in an aggregate annual amount as transfer or terminate the service of any employee other than any such termination for cause;
(x) establish or become obligated under any collective bargaining agreement, memorandum of understanding, or other contract with a result labor union, labor organization, works council or similar representative of all such amendments employees;
(xi) make any loans, advances or capital contributions to any other Person in excess of $100,00050,000 in the aggregate, except for (A) funding of commitments in the ordinary course of business and in accordance with the terms of any agreements in effect as of the date hereof, (B) loans among the Company and its Subsidiaries or among the Company’s Subsidiaries consistent with past practice, (C) advances for reimbursable employee expenses in the ordinary course of business, (D) advancement of reasonable legal expenses or (E) any indemnification agreement in effect on the date hereof;
(xii) (A) enter into any contract that would be a Company Contract or (B) modify, amend, terminate or assign, or imposing restrictions on waive or assign any material rights under, any Company Contract (or any contract that, if existing as of the date hereof, would be a Company Contract), except in the ordinary course of business, and, for the avoidance of doubt, with respect to clauses (A) and (B), except for: (1) any termination, renewal or extension in accordance with the terms of any existing Company Contract that occurs automatically without any action (other than notice of renewal or extension) by Company or its Subsidiaries, any Subsidiary of the Company; or (II2) immaterial changes any trade agreements entered into, modified, amended, terminated or amendments made as a result assigned in the ordinary course of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or abovebusiness provided that, in each case, other than for cause; no such action will result in a Company Material Adverse Effect or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Lawotherwise impede the Transactions;
(xxiii) other than the settlement of any Proceeding (A) retire, repay, defease, repurchase, discharge, satisfy reflected or redeem all or any portion reserved against on the balance sheet of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty Company (or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiariesnotes thereto); , (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness that would not reasonably be expected to restrict the operations of another Person; the Company and its Subsidiaries after the Effective Time or (C) create in connection with any Encumbrances on shareholder litigation against the Company and/or its employees, officers or directors relating to this Agreement, the Merger and/or the other Transactions in accordance with Section 6.11, settle, or offer or propose to settle, any property or assets of Proceeding against the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances;
(xi) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) involving a payment or other than the settlement transfer of such Proceedings that (A) involve only the payment of monetary damages value by the Company or any of its Subsidiaries not exceeding $50,000 individually, or $100,000 individually or in the aggregate aggregate;
(but excluding xiv) make or agree to make any amounts paid new capital expenditure or expenditures that, individually, is in excess of $50,000 or, in the aggregate, are in excess of $100,000;
(xv) other than the Loan or the issuance of Company Capital Stock upon exercise or exchange of any Company Warrants or Company Convertible Notes outstanding on behalf the date hereof, incur, create, assume, refinance, replace or prepay in any material respects the terms of any Indebtedness or any derivative financial instruments or arrangements, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise); provided, however, that the foregoing shall not restrict the incurrence of any Indebtedness among the Company and its Subsidiaries or among the Company’s Subsidiaries;
(xvi) enter into any new line of the Company Subsidiaries by business;
(xvii) take any applicable insurance policy maintained by the Company action, or fail to take any of the Company Subsidiaries)action, (B) do not impose any restrictions which action or limitations upon the assets, operations, business or conduct of failure would reasonably be expected to cause the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action required to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, registered as an investment company under the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other PersonInvestment Company Act;
(xviii) fail to use commercially reasonable efforts to maintain enter into any transactions or contracts with any Affiliates (other than directors or officers in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities their capacities as such) of the Company and its Subsidiaries as currently in effect as of the date hereofCompany; or
(xix) authorize, agree or enter into any arrangement or understanding to take any action that is prohibited by this Section 6.1(b). Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company or any of its Subsidiaries from taking any action, at any time or from time to time, that in the reasonable judgment of the Company, upon advice of counsel, is reasonably necessary for the Company to avoid being required to register as an investment company under the Investment Company Act; provided that prior to taking any action under this paragraph, the Company shall provide Parent with reasonable advance notice of any proposed action and shall in good faith discuss such proposed action with Parent.
Appears in 2 contracts
Samples: Merger Agreement (Aditxt, Inc.), Merger Agreement (Evofem Biosciences, Inc.)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, use reasonable best efforts to conduct its businesses in the Ordinary Courseordinary course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its material significant customers, suppliers, licensors, licensees, distributors, lessors and others having material significant business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition and any such actions taken pursuant to the prior proviso.
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or another direct or indirect wholly wholly-owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date existing and disclosed to Parent as of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards RSUs, Company PIAs or Company Warrants Restricted Stock outstanding as of the date hereof, or issued after the date hereof in accordance with this Agreement, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreementof, as applicable, as of the date hereofrelated Company RSU Agreement, the Company Restricted Stock Units Plan, the related Company PIA Award Agreement or the related Restricted Stock Award Agreement;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards RSUs, Company PIAs or Company Warrants Restricted Stock outstanding on the date hereof, or issued after the date hereof in accordance with this Agreement, in accordance with the terms of of, as applicable, the related Company RSU Agreement, the Company Restricted Stock Plan and applicable award agreements Units Plan, the related Company PIA Award Agreement or Company Warrant Agreement as of the date hereofrelated Restricted Stock Award Agreement; (B) the sale of shares issuances of Company Common Restricted Stock issued or Company RSUs to members of the Company Board pursuant to the exercise or vesting Company Director Compensation Policy to the extent described on Schedule 6.1(b)(ii)(B) of the Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of TaxesDisclosure Letter; and (C) issuances by a wholly wholly-owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly wholly-owned Subsidiary of the Company; and (D) shares of capital stock issued as a dividend made in accordance with Section 6.1(b)(i);
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than between wholly-owned Subsidiaries of the Company or, in the case of a Subsidiary of the Company, in connection with any acquisition permitted by clause (B) or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof, other than acquisitions for which the consideration is less than $1,000,000 individually or in the aggregate;
(v) sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract of sales, leases or dispositions for which the Company consideration is less than $2,000,000 in the aggregate or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin Hydrocarbons in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result ordinary course of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codebusiness;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly such transactions among wholly-owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Course)make, change or revoke any material election relating to TaxesTax election, (B) change an annual Tax accounting period with respect to material Taxesperiod, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of stateReturn, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any material Tax claim, audit, assessment or dispute or dispute, surrender any right to claim a material refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than Tax, or take any action which is reasonably likely to result in a material increase in the Ordinary Course)Tax liability of the Company or its Subsidiaries;
(ix) except as required by applicable Law or as required pursuant to an agreement or Company Plan existing as of the date hereof (A) grant any material increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees officers or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000employees; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefitsbenefits under any Company Plan; (C) grant any new equity-based or non-equity awards, other than issuances of Company Restricted Stock or Company RSUs to members of the Company Board pursuant to the Company Director Compensation Policy to the extent described on Schedule 6.1(b)(ii)(B) of the Company Disclosure Letter, or amend or modify the terms of any outstanding equity-based or non-equity awards, pay under any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2Company Plan; (D) pay or agree to pay to any current or former director, officerofficer or employee, employee whether past or other service provider present, any material pension, retirement allowance or other employee benefit not required by the terms any of any Company Plan as in effect existing as of the date hereof; (E) enter into any new, or amend any existing, material employment or severance or termination agreement with any current or former director, officer, officer or employee or other service provider, other making an annualized salary of more than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law150,000; (F) establish any material Company Plan which was not in existence or approved by the Company Board prior to the date of this Agreement, or amend any such plan or terminate any Company Plan arrangement in existence on the date of this Agreement, other than (I) amendments that do not Agreement if such amendment would have the effect of enhancing any compensation or benefits thereunder or otherwise resulting result in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plansCompany; (G) hire or promote any employee with an annualized salary of more than $150,000 or engage any other service provider independent contractor (who is a natural person) who has (with annualized payments of more than $150,000; or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) other than for cause, terminate the employment of any officer or any other employee or other service provider who has an with annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess salary of more than $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law150,000;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; Person or (CB) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing clauses (A) and (B) shall not restrict (I) the incurrence of Indebtedness (1) under existing credit facilities, (2) by the Company that is owed to any wholly-owned Subsidiary of the Company or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, (3) additional Indebtedness in an amount not to exceed $250,000, or (4) incurred or assumed in connection with any acquisition permitted by Section 6.1(b)(iv) or (II) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4);
(xi) (A) enter into any Contract contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release waive or assign any rights, claims or benefits rights under, any Company ContractContract (including the renewal of existing Company Contract on substantially the same terms in the ordinary course of business consistent with past practice), other than in each case, with respect to Sections 4.19(a)(vii), (x), and (xi) only, in the ordinary course of business consistent with past practice;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its SubsidiariesSubsidiaries having in each case a value in excess of $250,000 in the aggregate;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than (A) the settlement of such Proceedings that (A) involve proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $100,000 individually or 500,000 in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), and (B) do as would not impose result in any restrictions or limitations upon the assets, operations, business restriction on future activity or conduct of the Company or any of its Subsidiaries a finding or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any a violation of its SubsidiariesLaw; provided, however, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.106.11;
(xiv) make or commit to make any capital expenditures other in a given calendar quarter that are, in the aggregate greater than (x) 15% of the quarterly budgeted amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget set forth in Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable)environment;
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make enter into any loans, advances contract or capital contributions to, or investments in, consummate any other Person;
transaction described in subsection (xviiixvii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities Schedule 6.1(b) of the Company and its Subsidiaries as currently in effect as Disclosure Letter, regardless of the date hereofwhether such action would otherwise be permitted under this Section 6.1(b); or
(xixxviii) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Voting Agreement (Eclipse Resources Corp), Merger Agreement (Eclipse Resources Corp)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts to, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, conduct its businesses in the Ordinary Course, preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition and any such actions taken pursuant to the prior proviso.
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereof;; 37
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or the Organizational Documents of any Company Subsidiary;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) other than (A) pursuant to a Contract of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Code;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methods, except as required by GAAP or applicable Law;; 38
(viii) (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxes, (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than in the Ordinary Course);
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or 39 promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances;
(xi) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;; 40
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xix) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (GRIID Infrastructure Inc.), Merger Agreement (GRIID Infrastructure Inc.)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, use reasonable best efforts to conduct its businesses in the Ordinary Courseordinary course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its material significant customers, suppliers, licensors, licensees, distributors, lessors and others having material significant business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that no action or inaction by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereof;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or the Organizational Documents of any Company Subsidiary;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) other than (A) pursuant to a Contract of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Code;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methods, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxes, (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than in the Ordinary Course);
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances;
(xi) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xix) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (Parsley Energy, Inc.), Merger Agreement (Jagged Peak Energy Inc.)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required provided by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), ):
(a) the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, (i) conduct its businesses in the Ordinary Courseordinary course consistent with past practice and, subject to Section 6.1(b)(ix), shall use reasonable best efforts to preserve substantially intact its present business organization, goodwill retain the Company’s current officers and assetskey employees, comply and preserve its relationships with its key customers and suppliers, (ii) comply, in all material respects respects, with all applicable Laws and the Company ContractsLaw, and maintain in effect all existing material Company Permits(iii) not voluntarily resign, keep available the services transfer or relinquish any right as operator of its current officers and employees and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any their material property or asset of the Company or any of the Company Subsidiaries or the environmentOil and Gas Properties; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition and any such actions taken pursuant to the prior proviso.and
(b) Except (i) as set forth on without limiting the corresponding subsection of Schedule 6.1(b) generality of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned)foregoing, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit cause its Subsidiaries not to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, Subsidiaries except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another a direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date of this Agreement, (y) or as required by the terms of any existing Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereofPlan, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreementeach case, as applicablesuch terms, plans or agreements are in effect as of the date hereof;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse expiration of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms of restricted stock granted under the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; Plan, (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly wholly-owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly wholly-owned Subsidiary of the Company;, (C) issuances of restricted stock granted under the Company Stock Plan to non-officer employees (provided, however, that the aggregate amount of all such increases shall in no event exceed $2,500,000) and (D) withholding of Company Common Stock to satisfy any Tax withholding obligations with respect to awards granted pursuant to the Company Stock Plan.
(iii) amend or propose to amend the Company’s Organizational Documents or the Organizational Documents of any Company Subsidiaryof the Company’s Significant Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or other than another wholly-owned Subsidiary of the Company, (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) pursuant to an agreement of the Company or any of its Subsidiaries in effect on the date of this Agreement, (2) acquisitions for which the consideration is $20,000,000 individually and $100,000,000 in the aggregate and (3) acquisitions and licenses in the ordinary course of business or (C) make any loans, advances or capital contributions to, or investments in, any Person (other than the Company or any of its wholly-owned Subsidiaries), except for (1) loans, advances or capital contributions in the form of trade credit granted to customers in the ordinary course of business consistent with past practices, and (2) capital contributions to, or investments in, any Person not in excess of $10,000,000 individually or $30,000,000 in the aggregate;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract an agreement of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; or (B) non-exclusive licenses of Intellectual Property sales, leases or dispositions (1) for which the consideration is $20,000,000 or less or (2) made in the Ordinary Course; (C) the sale or other disposition ordinary course of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Code;business.
(vi) consummate, authorize, recommend, propose, enter into, adopt a plan propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Significant Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methods, except as required by GAAP or applicable Lawstatutory accounting requirements;
(viii) except as otherwise done pursuant to an acquisition permitted by Section 6.1(b)(iv), (A) make (other than in the Ordinary Course), change or revoke rescind any material election relating to TaxesTaxes (including any election for any joint venture, partnership, limited liability company or other investment where the Company has the authority to make such binding election, but excluding any election that must be made periodically and consistent with past practice), (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right material Proceeding relating to claim a refundTaxes, except where the amount of any such settlements settlement or compromises or forgone refunds compromise does not exceed $500,000 in the aggregate and, greater of 125% of the reserve for the absence of doubt, such matter on the Company and its Subsidiaries shall act reasonably in reaching such settlements financial statements or compromises or in forgoing such refunds$1,000,000, or (GC) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of change in any material respects any of its methods of reporting income or deductions for income Tax (other than purposes from those employed in the Ordinary Course)preparation of its income Tax Returns that have been filed for prior taxable years;
(ix) (A) grant any increases in the compensation (including bonuses) or benefits payable or to become payable to any of its current or former directors, officers, officers or employees with an annualized salary of $225,000 or other service providersmore, except as increases required by applicable Law, as required by the terms of a Law or any Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000Plan; (B) take grant any action increases in the compensation (including bonuses) or benefits payable or to accelerate become payable to any of employees with an annualized salary less than $225,000, except for increases in the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefitsbenefits of such employees made in the ordinary course of business for the purpose of retention or hiring of that individual; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officerofficer or key employee making an annualized salary of more than $225,000, employee whether past or other service provider present, any material pension, retirement allowance or other employee benefit not required by the terms of any Company Plan as in effect as of the date hereofexisting Company Plans; (ED) enter into any new, or materially amend any existing, employment employment, retention, change in control or severance or termination agreement with any current or former director, officer, officer or key employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in with an aggregate annual amount as a result of all such amendments in excess annualized salary of $100,000, 225,000 or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Lawmore; (FE) establish or become obligated under any Company collective bargaining agreement or any material Employee Benefit Plan which that was not in existence or approved by the Company Board in the ordinary course of business prior to the date of this Agreement, or amend or terminate any Company Plan such plan or arrangement in existence on the date of this Agreement, other than (I) amendments that do not Agreement if such amendment would have the effect of materially enhancing any benefits thereunder; (F) fund (or agree to fund) any compensation or benefits thereunder under any Employee Benefit Plan, including through a “rabbi” or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000similar trust, or imposing restrictions except where required by any Employee Benefit Plan existing on the Company date of this Agreement; or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any new employee or engage any other service provider (who is a natural person) who has (independent contractor or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment or service relationship of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each caseindependent contractor, other than for cause; where such hiring or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement termination is in the ordinary course of business consistent with a union or other similar labor organization, except as required by applicable Lawpast practice;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; Person or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing shall not restrict the (A) incurrence of Indebtedness (1) under existing credit facilities, (2) for extensions, renewals or refinancings of existing Indebtedness (including related premiums and expenses), (3) additional borrowings in an amount not to exceed $15,000,000 in the aggregate, or (4) by the Company that is owed to any wholly-owned Subsidiary of the Company or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, or (B) the creation of any Encumbrances securing any Indebtedness permitted to be incurred by clause (A) above;
(xi) (A) enter into any Contract contract that would be a Company Contract if it were other than in effect on the date ordinary course of this Agreement business consistent with past practice, or (B) materially modify, materially amend, terminate or assign, or waive, release waive or assign any rights, claims material right or benefits benefit under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only involving the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 10,000,000 in the aggregate (but excluding any amounts paid on behalf of aggregate; provided, however, that neither the Company or nor any of the Company its Subsidiaries by shall settle or compromise any applicable insurance policy maintained by the Company Proceeding if such settlement or any of the Company Subsidiaries)compromise (A) involves a material conduct remedy or material injunctive or similar relief, (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the involves an admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that Subsidiaries or (C) has a restrictive impact on the business of the Company shall be permitted to settle or any Transaction Litigation of its Subsidiaries in accordance with Section 6.10any material respect;
(xivxiii) authorize or make or commit to make any capital expenditures other that are in the aggregate greater than (x) 125 % of the aggregate amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget for the period indicated as set forth in Schedule 6.1(b)(xiv6.1(b)(xiii) of the Company Disclosure Letter and (y) Letter, except for capital expenditures to repair damage resulting from insured casualty events where there is a reasonable basis for a claim of insurance or capital expenditures required on an emergency basis made in response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or for the safety of individualsotherwise;
(xiv) fail to use reasonable best efforts to maintain, assets or the environment (provided that the Company shall notify Parent of any with financially responsible insurance companies, insurance in such expenditure amounts and against such risks and losses as soon as reasonably practicable)is maintained by it at present;
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act that would prevent or impede, or would reasonably be reasonably likely expected to prevent prevent, materially delay or impede, materially impede the Merger from qualifying as a reorganization within the meaning consummation of Section 368(a) any of the CodeTransactions;
(xvi) take amend or modify the Upstream MLP GP PSA in a manner that would impose or leave outstanding any action additional material continuing liabilities relating to or omit to take any action that is reasonably likely to cause arising out of the ownership of Memorial Production Partners GP LLC on the Company or any of its Subsidiaries after the conditions to the Merger set forth in Article VII to not be satisfiedEffective Time;
(xvii) make enter into or amend any loansCompany Related Party Transaction, advances or capital contributions to, or investments in, any other Person;than in the ordinary course of business consistent with past practice; or
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (agree or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xix) agree commit to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (Range Resources Corp), Merger Agreement (Memorial Resource Development Corp.)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, use reasonable best efforts to (i) conduct its businesses in the Ordinary Courseordinary course consistent with past practice, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its material significant customers, suppliers, creditors, licensors, licensees, distributors, lessors and others having material significant business dealings with it; provided that it and (ii) not voluntarily resign, transfer (except in connection with a sale of such Oil and Gas Properties otherwise permitted under this Section 6.1(aAgreement) shall not prohibit the Company and or relinquish any right as operator of any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any their material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition Oil and any such actions taken pursuant to the prior provisoGas Properties.
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, 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 distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for (1) dividends and distributions by a direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or another direct or indirect wholly wholly-owned Subsidiary of the CompanyCompany or (2) cash dividends payable to holders of the Company Preferred Stock in accordance with the Company Certificate of Designations, including any dividends that accrue during any period contemplated by Section 3(e) of the Company Certificate of Designations that shall be paid by the Company prior to the Effective Time to holders of the Company Preferred Stock in cash in lieu of an equivalent increase in the Accreted Value (as defined in the Company Certificate of Designations) of such Company Preferred Stock that otherwise would have occurred pursuant to such section in the absence of such cash payment; (B) permit any increase in the Accreted Value of the Company Preferred Stock; (C) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly owned Subsidiary of the Company); or (CD) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x1) as required by the terms of any capital stock or equity interest of a Subsidiary, (2) as required by any Company Subsidiary outstanding on Plan or (3) as required by the Company Certificate of Designations, in each case existing as of the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereof;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms shares of Restricted Stock granted under the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of outstanding on the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly wholly-owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly wholly-owned Subsidiary of the Company; and (C) shares of Company Common Stock issued upon conversion of the Preferred Stock in accordance with the Company Certificate of Designations;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another wholly-owned Subsidiary of the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof, in each case other than acquisitions for which the consideration is less than $5,000,000 individually or $25,000,000 in the aggregate;
(v) sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract of sales, leases or dispositions for which the Company consideration is $2,500,000 or any of its Subsidiaries as less individually or $15,000,000 or less in effect on the date of this Agreement aggregate and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin Hydrocarbons made in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result ordinary course of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codebusiness;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation such transactions solely among the Company and any wholly owned Subsidiaries of the Company or dissolution of dormant solely among wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) except as a result of a change in or as otherwise required by Law or in the ordinary course of business consistent with past practice, (A) make (other than in the Ordinary Course)make, change or revoke rescind any material election relating to TaxesTaxes (including any election for any joint venture, partnership, limited liability company or other investment where the Company has the authority to make such binding election in its discretion), (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right material Proceeding relating to claim a refund, except where Taxes for an amount materially in excess of the amount accrued or reserved with respect thereto on the financial statements of any such settlements or compromises or forgone refunds does not exceed $500,000 the Company included in the aggregate andCompany SEC Documents, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (GC) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of a material amount of Taxes of the Company or any of its Subsidiaries, (D) enter into any closing agreement with respect to any material amount of Tax, (E) amend any material Tax Return, or (other than F) change any material method of Tax accounting from those employed in the Ordinary Course)preparation of its income Tax Returns that have been filed for prior taxable years, except where such change would not have a material and adverse effect on the Tax position of the Company and its Subsidiaries, taken as a whole;
(ix) (A) grant any material increases in the compensation or benefits benefit payable or to become payable to any of its current or former directors, officers, employees officers or other service providerskey employees, except as required by applicable Law, as required by the terms of Law or pursuant to a Company Plan as in effect existing as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensationthis Agreement, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former directordirectors, officerofficers or key employees making an annualized salary of more than $175,000, employee or other service provider any material pension, retirement allowance or other employee benefit not required by any of the terms Company Plans or any of any Company Plan as in effect its Subsidiaries existing as of the date hereofof this Agreement; (EC) enter into any new, or materially amend any existing, employment material employment, retention, change in control or severance or termination agreement with any current directors, officers or former director, officer, employee or other service provider, other key employees making an annualized salary of more than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries175,000, (IID) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty hire, promote or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; ) of any director, officer or key employee, (IE) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(xF) (A) retire, repay, defease, repurchase, discharge, satisfy establish any material Company Plan which was not in existence or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred approved by the Company or its direct or indirect wholly owned Subsidiaries and owed Board prior to the date of this Agreement, or amend any such plan or arrangement in existence on the date of this Agreement if such amendment would have the effect of materially enhancing any benefits thereunder; provided, however¸ that no action will be a violation of this Section 6.1(b)(ix) if it is taken (1) pursuant to Section 3.2 of this Agreement, (2) in the ordinary course of business, (3) in order to comply with applicable Law or (4) in order to grant a cash-settled award to current independent directors for fiscal year 2019 that is substantially comparable in value to the annual equity awards granted to such independent directors under the Company or its direct or indirect wholly owned Subsidiaries); Stock Plan in 2018. (Bx) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; Person or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing shall not restrict the (A) incurrence of Indebtedness (1) under existing credit facilities in an amount not to exceed $25,000,000 in the aggregate, except with respect to any such incurrence to fund previously approved drilling and completion activities and other items, in each case, as set forth on Schedule 6.1(b)(xiv), (2) additional borrowings that are prepayable without premium or penalty at the Closing in an amount not to exceed $15,000,000 in the aggregate or (3) by the Company that is owed to any wholly-owned Subsidiary of the Company or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, or (B) the creation of any Encumbrances securing any Indebtedness permitted to be incurred by clause (A) above;
(xi) (A) enter into any Contract contract that would be a Company Contract Contract, if it were in effect on the date of this Agreement Agreement, or (B) materially modify, materially amend, terminate or assign, or waive, release waive or assign any rights, claims or benefits material rights under, any Company ContractContract in a manner which is materially adverse to the Company and its Subsidiaries, taken as a whole, or which could prevent or materially delay the consummation of the Transactions;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its SubsidiariesSubsidiaries having in each case a value in excess of $5,000,000 in the aggregate;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding Proceeding in respect of Taxes) other than (A) the settlement of such Proceedings that (A) involve involving only the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 5,000,000 in the aggregate and (but excluding B) as would not result in any amounts paid restriction on behalf future activity or conduct or a finding or admission of a violation of Law; provided, however, that neither the Company or nor any of the Company its Subsidiaries by shall settle or compromise any applicable insurance policy maintained by the Company Proceeding if such settlement or any of the Company Subsidiaries)compromise (A) involves a material conduct remedy or material injunctive or similar relief, (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the involves an admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that Subsidiaries or (C) has a restrictive impact on the business of the Company shall be permitted to settle or any Transaction Litigation of its Subsidiaries in accordance with Section 6.10any material respect;
(xiv) make or commit to make any capital expenditures other that are, in the aggregate greater than (x) 115% of the aggregate amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget for the period indicated as set forth in Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment environment;
(provided xv) enter into any new Oil and Gas Leases, other than for which the consideration is less than $5,000,000 in the aggregate per fiscal quarter; provided, however, that the Company shall notify Parent in advance of any such expenditure as soon as reasonably practicable)individual leasing transaction for which the consideration exceeds $100,000;
(xvxvi) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvixvii) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;; or
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (authorize or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xix) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, conduct its businesses in the Ordinary Courseordinary course, including by using commercially reasonable efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees organization and preserve its existing relationships with its material customers, key customers suppliers, licensors, licensees, distributors, lessors employees and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentcreditors; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, or other securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of specific events) into or exchangeable for any shares of capital stock of, the Company or its Subsidiaries, except for (1) dividends or distributions required by the Organizational Documents of any Subsidiary of the Company, and (2) dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date of this Agreement, (y) or as required contemplated by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or Benefit Plan (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of including any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereofAward);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery issuance of Company Common Stock upon the vesting ofvesting, settlement, exercise of or lapse of any restrictions on any Company Equity Awards or granted under the Company Warrants Equity Plans and outstanding on the date hereof or issued in compliance with clause (B) below; (B) issuances of Company Equity Awards under the Company Equity Plans in accordance with the express terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereofDisclosure Letter; (BC) the sale of shares of Company Common Stock capital stock or other equity issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, as a dividend made in each case, if necessary to effectuate exercise or the withholding of Taxesaccordance with Section 6.1(b)(i); and (CD) issuances by transactions solely between the Company and a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other solely between wholly owned Subsidiary Subsidiaries of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to adopt any material change in the Organizational Documents of any of the Company’s material Subsidiaries or otherwise take any action to exempt any Person from any provision of the Organizational Documents of the Company Subsidiaryor any of its Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person Person, or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, exchanging, licensing, or by any other manner), any properties, assets, business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) pursuant to an agreement of the Company or any of its Subsidiaries in effect on the date of this Agreement and set forth on Schedule 6.1(b)(iv) of the Company Disclosure Letter, (2) any such action solely between or among the Company and its Subsidiaries or between or among Subsidiaries of the Company, (3) acquisitions of inventory or other assets in the ordinary course of business consistent with past practice or pursuant to existing contracts or (4) acquisitions for which the consideration is $10,000,000 individually and $25,000,000 in the aggregate or less;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract an agreement of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in set forth on Schedule 6.1(b)(v) of the Company Disclosure Letter; , (B) non-exclusive the granting of nonexclusive licenses of Intellectual Property in the Ordinary Course; ordinary course of business, (C) the sale or other disposition of equipment deemed by among the Company in and its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale wholly owned Subsidiaries or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Code;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant among wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methods, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxes, (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that sales, leases, exchanges or dispositions for which the consideration and fair value is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 10,000,000 individually and $25,000,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than in the Ordinary Course);
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances;
(xi) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xix) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Samples: Merger Agreement (Energen Corp)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, use reasonable best efforts to (i) conduct its businesses in the Ordinary Courseordinary course consistent with past practice, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its material significant customers, suppliers, creditors, licensors, licensees, distributors, lessors and others having material significant business dealings with it; provided that it and (ii) not voluntarily resign, transfer (except in connection with a sale of such Oil and Gas Properties otherwise permitted under this Section 6.1(aAgreement) shall not prohibit the Company and or relinquish any right as operator of any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any their material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition Oil and any such actions taken pursuant to the prior provisoGas Properties.
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, 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 distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for (1) dividends and distributions by a direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or another direct or indirect wholly wholly-owned Subsidiary of the CompanyCompany or (2) cash dividends payable to holders of the Company Preferred Stock in accordance with the Company Certificate of Designations, including any dividends that accrue during any period contemplated by Section 3(e) of the Company Certificate of Designations that shall be paid by the Company prior to the Effective Time to holders of the Company Preferred Stock in cash in lieu of an equivalent increase in the Accreted Value (as defined in the Company Certificate of Designations) of such Company Preferred Stock that otherwise would have occurred pursuant to such section in the absence of such cash payment; (B) permit any increase in the Accreted Value of the Company Preferred Stock; (C) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly owned Subsidiary of the Company); or (CD) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x1) as required by the terms of any capital stock or equity interest of a Subsidiary, (2) as required by any Company Subsidiary outstanding on Plan or (3) as required by the Company Certificate of Designations, in each case existing as of the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereof;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms shares of Restricted Stock granted under the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of outstanding on the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly wholly-owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly wholly-owned Subsidiary of the Company; and (C) shares of Company Common Stock issued upon conversion of the Preferred Stock in accordance with the Company Certificate of Designations;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another wholly-owned Subsidiary of the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof, in each case other than acquisitions for which the consideration is less than $5,000,000 individually or $25,000,000 in the aggregate;
(v) sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract of sales, leases or dispositions for which the Company consideration is $2,500,000 or any of its Subsidiaries as less individually or $15,000,000 or less in effect on the date of this Agreement aggregate and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin Hydrocarbons made in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result ordinary course of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codebusiness;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation such transactions solely among the Company and any wholly owned Subsidiaries of the Company or dissolution of dormant solely among wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) except as a result of a change in or as otherwise required by Law or in the ordinary course of business consistent with past practice, (A) make (other than in the Ordinary Course)make, change or revoke rescind any material election relating to TaxesTaxes (including any election for any joint venture, partnership, limited liability company or other investment where the Company has the authority to make such binding election in its discretion), (B) change an annual Tax accounting period with respect to material Taxes, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right material Proceeding relating to claim a refund, except where Taxes for an amount materially in excess of the amount accrued or reserved with respect thereto on the financial statements of any such settlements or compromises or forgone refunds does not exceed $500,000 the Company included in the aggregate andCompany SEC Documents, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (GC) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of a material amount of Taxes of the Company or any of its Subsidiaries, (D) enter into any closing agreement with respect to any material amount of Tax, (E) amend any material Tax Return, or (other than F) change any material method of Tax accounting from those employed in the Ordinary Course)preparation of its income Tax Returns that have been filed for prior taxable years, except where such change would not have a material and adverse effect on the Tax position of the Company and its Subsidiaries, taken as a whole;
(ix) (A) grant any material increases in the compensation or benefits benefit payable or to become payable to any of its current or former directors, officers, employees officers or other service providerskey employees, except as required by applicable Law, as required by the terms of Law or pursuant to a Company Plan as in effect existing as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensationthis Agreement, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former directordirectors, officerofficers or key employees making an annualized salary of more than $175,000, employee or other service provider any material pension, retirement allowance or other employee benefit not required by any of the terms Company Plans or any of any Company Plan as in effect its Subsidiaries existing as of the date hereofof this Agreement; (EC) enter into any new, or materially amend any existing, employment material employment, retention, change in control or severance or termination agreement with any current directors, officers or former director, officer, employee or other service provider, other key employees making an annualized salary of more than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries175,000, (IID) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty hire, promote or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; ) of any director, officer or key employee, (IE) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement or (F) establish any material Company Plan which was not in existence or approved by the Company Board prior to the date of this Agreement, or amend any such plan or arrangement in existence on the date of this Agreement if such amendment would have the effect of materially enhancing any benefits thereunder; provided, however¸ that no action will be a violation of this Section 6.1(b)(ix) if it is taken (1) pursuant to Section 3.2 of this Agreement, (2) in the ordinary course of business, (3) in order to comply with applicable Law or (4) in order to grant a union or other similar labor organization, except as required by applicable Law;cash-settled award to current independent directors for fiscal year 2019 that is substantially comparable in value to the annual equity awards granted to such independent directors under the Company Stock Plan in 2018.
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; Person or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing shall not restrict the (A) incurrence of Indebtedness (1) under existing credit facilities in an amount not to exceed $25,000,000 in the aggregate, except with respect to any such incurrence to fund previously approved drilling and completion activities and other items, in each case, as set forth on Schedule 6.1(b)(xiv), (2) additional borrowings that are prepayable without premium or penalty at the Closing in an amount not to exceed $15,000,000 in the aggregate or (3) by the Company that is owed to any wholly-owned Subsidiary of the Company or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, or (B) the creation of any Encumbrances securing any Indebtedness permitted to be incurred by clause (A) above;
(xi) (A) enter into any Contract contract that would be a Company Contract Contract, if it were in effect on the date of this Agreement Agreement, or (B) materially modify, materially amend, terminate or assign, or waive, release waive or assign any rights, claims or benefits material rights under, any Company ContractContract in a manner which is materially adverse to the Company and its Subsidiaries, taken as a whole, or which could prevent or materially delay the consummation of the Transactions;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its SubsidiariesSubsidiaries having in each case a value in excess of $5,000,000 in the aggregate;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding Proceeding in respect of Taxes) other than (A) the settlement of such Proceedings that (A) involve involving only the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 5,000,000 in the aggregate and (but excluding B) as would not result in any amounts paid restriction on behalf future activity or conduct or a finding or admission of a violation of Law; provided, however, that neither the Company or nor any of the Company its Subsidiaries by shall settle or compromise any applicable insurance policy maintained by the Company Proceeding if such settlement or any of the Company Subsidiaries)compromise (A) involves a material conduct remedy or material injunctive or similar relief, (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the involves an admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that Subsidiaries or (C) has a restrictive impact on the business of the Company shall be permitted to settle or any Transaction Litigation of its Subsidiaries in accordance with Section 6.10any material respect;
(xiv) make or commit to make any capital expenditures other that are, in the aggregate greater than (x) 115% of the aggregate amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget for the period indicated as set forth in Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment environment;
(provided xv) enter into any new Oil and Gas Leases, other than for which the consideration is less than $5,000,000 in the aggregate per fiscal quarter; provided, however, that the Company shall notify Parent in advance of any such expenditure as soon as reasonably practicable)individual leasing transaction for which the consideration exceeds $100,000;
(xvxvi) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvixvii) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;; or
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (authorize or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xix) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Samples: Merger Agreement (WildHorse Resource Development Corp)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, conduct its businesses in the Ordinary Courseordinary course, including by using commercially reasonable efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees organization and preserve its existing relationships with its material key customers, suppliers, licensors, licensees, distributors, lessors creditors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentemployees; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, or other securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of specific events) into or exchangeable for any shares of capital stock of, the Company or its Subsidiaries, except for (1) dividends or distributions required by the Organizational Documents of any Subsidiary of the Company and (2) dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date of this Agreement, (y) or as required contemplated by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or Benefit Plan (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of including any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereofAward);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery issuance of Company Common Stock upon the vesting ofvesting, settlement, exercise of or lapse of any restrictions on any Company Equity Awards or granted under the Company Warrants Equity Plan and outstanding on the date hereof or issued in compliance with clause (B) below; (B) issuances of Company Equity Awards under the Company Equity Plans in accordance with the express terms of the Company Disclosure Letter; (C) the issuance of Company Common Stock upon the conversion of shares of the Company Preferred Stock into shares of Company Common Stock in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as Certificate of the date hereofDesignations; (BD) the sale of shares of Company Common Stock capital stock or other equity issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, as a dividend made in each case, if necessary to effectuate exercise or the withholding of Taxesaccordance with Section 6.1(b)(i); and (CE) issuances by transactions solely between the Company and a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other solely between wholly owned Subsidiary Subsidiaries of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to adopt any material change in the Organizational Documents of any of the Company’s material Subsidiaries or otherwise take any action to exempt any Person from any provision of the Organizational Documents of the Company Subsidiaryor any of its Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, exchanging, licensing, or by any other manner), any properties, assets, business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) any such action solely between or among the Company and its Subsidiaries or between or among Subsidiaries of the Company, (2) acquisitions of inventory or other assets in the ordinary course of business consistent with past practice or pursuant to existing contracts or (3) acquisitions for which the consideration is $1,000,000 individually or $5,000,000 in the aggregate or less;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract an agreement of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; Agreement, (B) non-exclusive licenses among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of Intellectual Property in the Ordinary Course; Company, (C) sales, leases, exchanges or dispositions for which the sale consideration and fair value is $1,000,000 individually or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete $5,000,000 in the Ordinary Course, aggregate or less or (D) the sale or disposition sales of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 Hydrocarbons made in the aggregate, or (E) the sale ordinary course of Bitcoin in the Ordinary Coursebusiness; provided that the Company shall not be permitted to sell any asset if, if as a result of such sale, sale the Company would fail the “the substantially-all test” of Code Section 368(a) of the Code);
(vi) consummate, authorize, recommend, propose, enter into, adopt a plan propose or announce an any intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation such transactions solely among the Company and any Subsidiaries of the Company or dissolution of dormant wholly owned solely among Subsidiaries of the Company;
(vii) change in any material respect their material financial accounting principles, practices or methodsmethods that would affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Courseordinary course of business), change or revoke rescind any material election relating to TaxesTaxes (including any such election for any joint venture, partnership, limited liability company or other investment where the Company has the authority to make such binding election, but excluding any such election that is made periodically and consistent with past practice) except where such election would not have a material and adverse effect on the Tax position of the Company and its Subsidiaries, (B) change an annual amend any material Tax accounting period with respect to Return, except where such amendment would not have a material Taxesand adverse effect on the Tax position of the Company and its Subsidiaries, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, claim or assessment or dispute or surrender by any right to claim a refundTaxing Authority, except where the amount of any such settlements settlement or compromises or forgone refunds compromise does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds2,500,000, or (GD) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of change any material method of Tax (other than accounting from those employed in the Ordinary Course)preparation of its Tax Returns that have been filed for prior taxable years;
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; Benefit Plan, (EA) enter into, adopt or terminate any material Company Benefit Plan, other than entering into employment agreements in the ordinary course of business, (B) amend any newCompany Benefit Plan, other than amendments in the ordinary course of business (including, for the avoidance of doubt, annual renewals of welfare benefit plans) and other than amendments that do not materially increase the cost to the Company of maintaining such Company Benefit Plan, or amend any existing, employment or severance or termination agreement with (C) materially increase the cash compensation payable to any current or former employee or director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form except in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment ordinary course of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Lawbusiness;
(x) (A) retireincur, repaycreate, defeaseassume or guarantee any Indebtedness, repurchaseother than (1) incurrences under the Company Credit Agreement in the ordinary course of business, discharge, satisfy (2) transactions solely between or redeem all among the Company and its Subsidiaries or any portion of the outstanding aggregate principal amount solely between or among Subsidiaries of the Company’s Indebtedness that has a repayment cost, “make whole” amountor, prepayment penalty or similar obligation (other than (i3) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of any Indebtedness incurred or assumed in connection with any acquisition permitted by Section 6.1(b)(iv), in an aggregate amount under this clause (x)(A)(3) not to exceed the Company purchase price of any such acquisition, and in each case guarantees thereof or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume suffer to exist any Encumbrance, other than (1) Encumbrances securing the Company Credit Agreement or other Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries existing on the date hereof or incurred in connection compliance with any Indebtedness the foregoing clause (A), in each case in accordance with the terms thereof, other than (2) Encumbrances in existence on September 30, 2018 and disclosed in the Company’s Quarterly Report on Form 10-Q for the three-months ended September 30, 2018, (3) Encumbrances securing Indebtedness incurred or assumed pursuant to clause (x)(A)(3) above, or (4) Permitted Encumbrances;
(xi) except as expressly permitted in this Section 6.1 and other than in the ordinary course of business consistent with past practice, (A) enter into or assume any Contract that would be have been a Company Contract if had it were in effect on been entered into prior to the date of this Agreement or (B) materially modifyterminate, materially amend, terminate or assign, or waivetransfer, release or assign any rightsmodify, claims or benefits supplement, deliver a notice of termination under, fail to renew, or waive or accelerate any material rights or defer any liabilities under any Company Contract or any Contract that would have been a Company Contract had it been entered into prior to the date of this Agreement, excluding any termination upon expiration of a term in accordance with the terms of such Company Contract;
(xii) cancel, modify other than the settlement of any Proceedings reflected or waive any debts or claims held by reserved against on the balance sheet of the Company (or any of its Subsidiaries or waive any rights held by in the Company or any of its Subsidiaries;
(xiii) waive, release, assignnotes thereto), settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding (A) any audit, claim or other proceeding in respect of Taxes, which shall be governed exclusively by Section 6.1(b)(viii) other than the settlement of such Proceedings that and (AB) involve only any Transaction Litigation, which shall be governed exclusively by Section 6.10)) involving solely the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 1,000,000 in the aggregate (but excluding any amounts paid on behalf of aggregate; provided, however, that neither the Company or nor any of the Company its Subsidiaries by shall settle or compromise any applicable insurance policy maintained by the Company Proceeding if such settlement or any of the Company Subsidiaries)compromise (A) involves a material conduct remedy or material injunctive or similar relief, (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the involves an admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that Subsidiaries or (C) has a materially restrictive impact on the business of the Company shall be permitted to settle or any Transaction Litigation in accordance with Section 6.10of its Subsidiaries;
(xivxiii) authorize or make or commit to make any capital expenditures other that are in the aggregate greater than one hundred twelve and one half percent (x112.5%) of the aggregate amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget for the applicable quarter of 2018 and 2019, except to the extent such operations are specifically described in Schedule 6.1(b)(xiv6.1(b)(xiii) of the Company Disclosure Letter and (y) Letter, except, in each case, for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment environment;
(provided xiv) hire any executive officer or any employees, consultants or other independent contractors (other than for the purpose of filling current openings or backfilling positions that become open after the Company shall notify Parent date hereof) receiving annual salary or annual guaranteed compensation in excess of any such expenditure as soon as reasonably practicable)$175,000, individually, or $750,000, in the aggregate;
(xv) take (A) enter into any actionlease for real property that would be a Company Material Real Property Lease if entered into prior to the date hereof or (B) terminate, cause any action to be takenamend, knowingly assign, transfer, modify, supplement, deliver a notice of termination under, fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impederenew, or would be reasonably likely to prevent waive or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Codeaccelerate any rights or defer any liabilities under any Company Material Real Property Lease;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any in all material Company Insurance Policies (respects, or substantially similar replacements thereto); provided that in the event of a termination, cancellation fail to replace or lapse of any material Company Insurance Policyrenew, the Company shall use commercially reasonable efforts to promptly obtain replacement material insurance policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently to the extent commercially reasonable in effect as the Company’s business judgment in light of prevailing conditions in the date hereofinsurance market; or
(xixxvii) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Samples: Merger Agreement (Cimarex Energy Co)
Conduct of Company Business Pending the Merger. 36
(a) Except The Company agrees that except as (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, Law or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts to(A) the Company shall, and shall cause each of its Subsidiaries to to, use its commercially reasonable efforts to, to (1) conduct its businesses in all material respects in the Ordinary Course, ordinary course consistent with past practice and (2) preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees organization and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and others having material key business dealings relationships (including with it; provided that this Section 6.1(a) shall not prohibit the Company Manager), vendors and any of counterparties and (B) the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, shall maintain its status as a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition and any such actions taken pursuant to the prior provisoREIT.
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe CanadaLaw, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, 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 distribution (whether in cash, stock, property or otherwise) in respect of any outstanding capital stock of, or other equity interests in, the Company or any of its Subsidiaries, except for (1) regular monthly dividends and distributions by a direct or indirect wholly owned Subsidiary payable in respect of the Company Class B Common Stock consistent with past practice and either (x) having a record date that is prior to the Determination Date or (y) in amounts that do not exceed $0.0637 per share per month; (2) dividends or other distributions to the Company by any directly or another direct or indirect indirectly wholly owned Subsidiary of the Company; (3) without duplication of the amounts described in clauses (1) and (2), any dividends or other distributions necessary for the Company or any Subsidiary thereof (as applicable) to maintain its status as a REIT under the Code and avoid the imposition of income or excise Tax (including the Minimum Distribution Dividend); or (4) any dividend to the extent authorized, declared and paid in accordance with Section 6.20; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly owned Subsidiary of the Company); or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company, except as required by the Organizational Documents of the Company or any Subsidiary of the Company, except in each case, existing as of the date hereof (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on granted following the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, Agreement in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant this Agreement, as applicable, as of the date hereof);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: than (A) the delivery shares of Company Capital Stock or capital stock or other ownership interests of any Subsidiary of the Company issued as a dividend made in accordance with Section 6.1(b)(i) and (B) the issuance of Company Class B Common Stock upon in connection with the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof Company’s Dividend Reinvestment and Share Purchase Plan consistent with past practice and in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement such plan existing as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or adopt any material change in the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries that would, in either case, reasonably be expected to prevent or materially delay the consummation of the Transactions;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than Merger Sub or another wholly owned Subsidiary of Parent, (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any assets or any business or any corporation, partnership, association or other business organization or division thereof; or (C) enter into any partnership, joint venture or similar arrangement involving a material investment or expenditure of funds by the Company or any of its Subsidiaries, but in each case only if such action could reasonably be expected to prevent or materially delay the consummation of the Transactions;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) assets, other than (Ain the ordinary course of business consistent with past practice; provided, that any sales, leases or dispositions of any assets permitted by this Section 6.1(b)(v) pursuant to a Contract made on or after the Determination Date shall be at or above the fair market value of such asset used in the determination of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the CodeAdjusted Book Value Per Share;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation such transactions among the Company and any wholly owned Subsidiary of the Company or dissolution of dormant between or among wholly owned Subsidiaries of the Company;
(vii) change in any material respect their its material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) except (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxesordinary course of business consistent with past practice, (B) change an annual Tax accounting period with respect to material Taxes, if required by Law or (C) adopt if necessary (other than in 1) to preserve the Ordinary CourseCompany’s or any Subsidiary’s qualification as a REIT under the Code or (2) to qualify or preserve the status of any Subsidiary of the Company as a disregarded entity or partnership for U.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt or change any Tax accounting methodperiod or material method of Tax accounting, (D) file any material amended Tax Return that is reasonably likely to if the filing of such amended Tax Return would result in a material increase in the Taxes payable by the Company or any of its Subsidiaries, settle or compromise any material liability for Taxes or any Tax audit or other Proceeding relating to a Tax liability (other than as required pursuant to a “determination” within the meaning material amount of Section 1313(a) of the Code (or any analogous provision of stateTaxes, local or foreign Law)), (E) enter into any closing or similar agreement with respect to material Taxesany Taxing Authority, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount material refund of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refundsTaxes, or (G) agree to an any extension or waiver of the statute of limitations with respect to the assessment or determination a material amount of any material Tax (other than in the Ordinary Course)Taxes;
(ix) (A) grant enter into any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providerscontract that would be a Company Contract, except as required by applicable Law, as required by would not reasonably be expected to prevent or materially delay the terms of a Company Plan as in effect as consummation of the date hereof Transactions, or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting modify, amend, terminate or lapsing of restrictions or paymentassign, or fund waive or assign any rights under, any Company Contract in any other way secure manner which could reasonably be expected to prevent or materially delay the payment, consummation of compensation or benefits; the Transactions;
(Cx) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (DA) pay or agree to pay to any current director or former director, officer, employee officer of the Company or other service provider any pension, retirement allowance of its Subsidiaries any compensatory payment or other benefit not required by the terms of any Company Plan as in effect existing as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (FB) establish any new Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not Agreement if such amendment would have the effect of enhancing or increasing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Personthereunder; or (C) create grant any Encumbrances on any property material increase in the compensation payable or assets of the Company or to become payable to any of its Subsidiaries in connection with directors, officers or any Indebtedness thereofother employees; provided, other than Permitted Encumbrances;
(xi) (A) enter into any Contract however, that would no action will be a Company Contract violation of this Section 6.1(b)(x) if it were is taken (1) in effect order to comply with applicable Law or (2) pursuant to a Company Plan in existence on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company ContractAgreement;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xviixi) make any loans, advances or capital contributions to, or investments in, any other Person, except in the ordinary course of business; notwithstanding anything in this Agreement to the contrary, the Company and its Subsidiaries may undertake customary asset management and servicing activities with respect to its assets and loans in its reasonable discretion, including without limitation, restructuring, extending, modifying loans and assets and foreclosing on collateral;
(xviiixii) take any action, or fail to use commercially reasonable efforts take any action, which action or failure could reasonably be expected to maintain in full force and effect cause the Company to fail to qualify as a REIT or any material of its Subsidiaries to cease to be treated as any of (A) a partnership or disregarded entity for U.S. federal income tax purposes or (B) a Qualified REIT Subsidiary, a Taxable REIT Subsidiary or a subsidiary REIT under the applicable provisions of Section 856 of the Code, as the case may be;
(xiii) following the Determination Date, other than the settlement of any (A)(x) Proceeding reflected or reserved against the balance sheet of the Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation notes thereto) or lapse of any material Company Insurance Policy, (y) Proceeding that would not reasonably be expected to restrict the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently that does not exceed $10,000,000 or (B) Transaction Litigation in effect as accordance with Section 6.10, settle or offer or propose to settle, any Proceeding (excluding any audit, claim or other Proceeding in respect of Taxes) involving the payment of monetary damages by the Company or any of its Subsidiaries of any amount in excess of the date hereofamount set forth in Schedule 6.1(b)(xiii) of the Company Disclosure Letter.
(xiv) incur, create, assume, refinance, replace or prepay any Indebtedness for borrowed money or issue or amend the terms of any debt securities of the Company or any of its Subsidiaries, except (A) Indebtedness incurred under the Company’s existing debt facilities, as set forth on Section 6.1(b)(xiv) of the Company Disclosure Letter, in the ordinary course of business consistent with past practice (including to the extent necessary to pay dividends permitted by Section 6.1(b)(i)); (B) funding any transactions permitted by this Section 6.1(b); (C) Indebtedness that does not, in the aggregate, exceed $50,000,000; (D) refinancing, amending, extending or replacement of existing Indebtedness; or (E) otherwise in the ordinary course of business consistent with past practice;
(xv) enter into any new line of business;
(xvi) take any action, or fail to take any action, which action or failure would reasonably be expected to cause the Company or any of the Subsidiaries of the Company to be required to be registered as an investment company under the Investment Company Act;
(xvii) other than with Subsidiaries of the Company, enter into any material transactions or contracts with any Affiliates (other than directors or officers in their capacities as such) of the Company or the Company Manager or any of its Affiliates; or
(xixxviii) agree or enter into any arrangement or understanding to take any action that is prohibited by this Section 6.1(b).
(c) Within one (1) Business Day of the Determination Date, the Company shall deliver a statement that sets forth all of the Company’s holdings in its investment portfolios, including but not limited to, all assets, debt and hedging transactions. Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company or any of its Subsidiaries from taking any action, at any time or from time to time, that in the reasonable judgment of the Company, upon advice of counsel, is reasonably necessary for the Company to (i) maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the Effective Time, (ii) avoid incurring entity level income or excise Taxes under the Code or applicable state or local Law, including making dividend or other distribution payments to the Company Stockholders in accordance with this Agreement or otherwise, or (iii) avoid being required to register as an investment company under the Investment Company Act; provided that prior to taking any action under this paragraph, the Company shall provide Parent with reasonable advance notice of any proposed action and shall in good faith discuss such proposed action with Parent.
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Conduct of Company Business Pending the Merger. 36
(a) Except The Company covenants and agrees that until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, except as (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, including Annex B, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, Law or (iv) as otherwise consented to by Parent in writing writing, (which consent shall not be unreasonably withheld, delayed or conditioned), A) the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to to, use its commercially reasonable efforts to, to conduct its businesses in the Ordinary Course, preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws in the ordinary course and (B) the Company Contracts, and shall maintain in effect all existing material Company Permits, keep available the services of its current officers and employees and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, status as a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentREIT; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe CanadaLaw, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, 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 distribution (whether in cash, stock, property or otherwise) in respect of any outstanding capital stock of, or other equity interests in, the Company or any of its Subsidiaries, except for (1) dividends and or distributions required by a direct or indirect wholly owned Subsidiary the Organizational Documents of the Company or any of its Subsidiaries; (2) regular quarterly dividends payable in respect of the Company Common Stock consistent with past practice; (3) dividends or other distributions to the Company by any directly or another direct or indirect indirectly wholly owned Subsidiary of the Company; (4) without duplication of the amounts described in clauses (1) and (3), any dividends or other distributions necessary for the Company to maintain its status as a REIT under the Code and avoid the imposition of corporate level tax under Section 857 of the Code or excise Tax under Section 4981 of the Code (including the Minimum Distribution Dividend); or (5) any dividend to the extent declared and paid in accordance with Section 6.19; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly owned Subsidiary of the Company); or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of the Company or any Company Subsidiary outstanding on of the Company, in each case, existing as of the date hereof (or granted following the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, Agreement in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant this Agreement, as applicable, as of the date hereof);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery than shares of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof capital stock issued as a dividend made in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;Section 6.1(b)(i).
(iii) amend or propose to amend the Company’s Organizational Documents or the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another Subsidiary of the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue sell or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue sell or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) other than (A) pursuant to a Contract of any asset or property that is held as “real estate owned” or “REO,” unless (x) the Company asset or any of its Subsidiaries as in effect on the date of this Agreement and property is listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; , (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (Cy) the sale or other disposition of equipment deemed by the Company applicable REO asset or property, taken together with all other relevant transactions, qualifies for the safe harbor described in its reasonable business judgment Section 857(b)(6)(C) of the Code; provided, however, that any sale of an REO asset or property that is listed in Schedule 6.1(b)(v) and that is as of the date hereof, and continues to be obsolete be, held in the Ordinary Coursea Taxable REIT Subsidiary, need not satisfy such safe harbor, and (Dz) the sale or other disposition of immaterial assets (excluding Intellectual Property Rights) the applicable REO asset or property will not result in an amount not in excess of $250,000 increase in the aggregateMinimum Distribution Dividend payable by the Company pursuant to Section 6.19(a), or (EB) the sale of Bitcoin any other asset or property, other than (in the Ordinary Course; provided case of clause (B)) any sales or other dispositions of assets or properties (1) for which the consideration does not exceed $1,000,000 individually or $5,000,000 in the aggregate or (2) that are made in the Company shall not be permitted to sell any asset if, as a result ordinary course of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codebusiness;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) except (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxesordinary course of business, (B) change an annual Tax accounting period with respect to material Taxesif required by Law, or (C) if necessary (1) to preserve the Company’s qualification as a REIT under the Code or (2) to qualify or preserve the status of any Subsidiary of the Company as a disregarded entity or partnership for U.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt (other than in the Ordinary Course) or change any material Tax accounting methodperiod or material method of Tax accounting, (D) file any material amended Tax Return that is reasonably likely to if the filing of such amended Tax Return would result in a material increase in the Taxes payable by the Company or any of its Subsidiaries, settle or compromise any material liability for Taxes or any Tax audit or other proceeding relating to a Tax liability (other than as required pursuant to a “determination” within the meaning material amount of Section 1313(a) of the Code (or any analogous provision of stateTaxes, local or foreign Law)), (E) enter into any closing or similar agreement with respect to material Taxesany Taxing Authority, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount material refund of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refundsTaxes, or (G) agree to an any extension or waiver of the statute of limitations with respect to the assessment or determination a material amount of any material Tax (other than in the Ordinary Course)Taxes;
(ix) (A) grant any increases increase in the compensation or benefits payable or to become payable to any of its current or former directors, officers, executive officers or key employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof Law or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan material employee benefit plan which was not in existence prior to the date of this Agreement, or amend any such plan or terminate any Company Plan arrangement in existence on the date of this Agreement; provided, other than (Ihowever, that no action will be a violation of this Section 6.1(b)(ix) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting if it is taken in increased costs order to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or comply with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(xA) enter into any contract that would be a Company Contract, except as would not prevent or materially delay the consummation of the Transactions and is terminable without penalty on not more than 90 days’ notice, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract in any material respect, and, for the avoidance of doubt, with respect to clauses (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (iiB), except for (1) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incurextent not prohibited by other provisions hereof, create or assume any Indebtedness or guarantee any such Indebtedness contracts providing for the origination, investment, servicing and management of another Person; or (C) create any Encumbrances on any property or assets of commercial real estate loans by the Company or any of its Subsidiaries in connection the ordinary course of business and that are materially consistent with the contracts or forms thereof provided to Parent prior to the date hereof; (2) any Indebtedness thereof, termination or renewal in accordance with the terms of any existing Company Contract that occurs automatically without any action (other than Permitted Encumbrancesnotice of renewal) by Company or any applicable Subsidiary of the Company; and (3) any Company Loans entered into, amended, terminated or assigned in the ordinary course of business;
(xi) other than the settlement of any Proceeding (A) enter into any Contract that would be a Company Contract if it were in effect reflected or reserved against on the date balance sheet of this Agreement the Company (or in the notes thereto), (B) materially modify, materially amend, terminate or assignthat would not reasonably be expected to restrict the operations of the Company and its Subsidiaries, or waive, release or assign (C) in connection with any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by stockholder litigation against the Company or any of and/or its Subsidiaries or waive any rights held by officers and directors relating to this Agreement, the Company or any of its Subsidiaries;
(xiii) waive, release, assignMerger and/or the other Transactions in accordance with Section 6.11, settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) involving (1) an award of injunctive or other than equitable relief against the settlement Company or any of such Proceedings that its Subsidiaries, (A2) involve only the payment an admission of monetary damages wrongdoing by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf 3) a payment or other transfer of the Company or any of the Company Subsidiaries value by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries exceeding $1,000,000 individually, or $5,000,000 in the aggregate;
(xii) take any equitable action, or injunctive remedies on fail to take any action, which action or failure could reasonably be expected to cause the Company to fail to qualify as a REIT or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or to cease to be treated as any of its Subsidiaries; provided(A) a partnership or disregarded entity for U.S. 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, that as the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10case may be;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xvxiii) take any action, cause any action to be taken, knowingly or fail to take any action or knowingly fail to cause any action to be takenaction, which action or failure to act would prevent or impede, or would could reasonably be reasonably likely expected to prevent or impede, impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvixiv) take other than in the ordinary course of business incur, create, assume, refinance, replace or prepay in any action material respects the terms of any Indebtedness or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances derivative financial instruments or capital contributions toarrangements, or investments inissue or sell any debt securities or calls, options, warrants or other rights to acquire any other Person;
debt securities (xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (directly, contingently or substantially similar replacements theretootherwise); provided provided, however, that in the event of a termination, cancellation or lapse foregoing shall not restrict (A) the incurrence of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of Indebtedness among the Company and its wholly owned Subsidiaries as currently in effect as and/or wholly owned Subsidiaries of the date hereofOperating Partnership or among the Company’s wholly owned Subsidiaries and/or wholly owned Subsidiaries of the Operating Partnership, (B) the incurrence of any Indebtedness in connection with funding Company Loans originated in the ordinary course of business or (C) the repayment of Indebtedness in the ordinary course of business;
(xv) take any action, or fail to take any action, which action or failure (A) would be inconsistent with the requirements specified in Annex B or (B) would reasonably be expected to cause the Company or any of the Company’s Subsidiaries to be required to be registered as an investment company under the Investment Company Act; or
(xixxvi) agree to take any action that is prohibited by this Section 6.1(b). Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company or any of its Subsidiaries from taking any action, at any time or from time to time, that in the reasonable judgment of the Company, upon advice of counsel, is reasonably necessary for the Company to (i) maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the Effective Time, (ii) avoid incurring entity level income or excise Taxes under the Code or applicable state or local Law, including making dividend or other distribution payments to the Company Stockholders in accordance with this Agreement or otherwise, or (iii) avoid being required to register as an investment company under the Investment Company Act.
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Conduct of Company Business Pending the Merger. 36
(a) Except (iw) as set forth on Schedule in Section 6.1(a) of the Company Disclosure LetterSchedules, (iix) as expressly permitted or required by this Agreement, (iiiy) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, Law or (ivz) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts to(A) the Company shall, and shall cause each of its Subsidiaries to to, use its commercially reasonable efforts to, to (1) conduct its businesses in all material respects in the Ordinary Course, ordinary course consistent with past practice and (2) preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees organization and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors key business relationships and others having material business dealings with it; provided that this Section 6.1(a(B) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, shall maintain its status as a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentREIT; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoprovision of Section 6.1(b).
(b) Except (iw) as set forth on the corresponding subsection of Schedule in Section 6.1(b) of the Company Disclosure LetterSchedules, (iix) as expressly permitted or required by this Agreement, (y) as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe CanadaLaw, or (ivz) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, 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 distribution (whether in cash, stock, property or otherwise) in respect of any outstanding capital stock of, or other equity interests in, the Company or any of its Subsidiaries, except for (1) the Closing Dividend, (2) regular quarterly dividends and distributions by a direct or indirect wholly owned Subsidiary payable in respect of the Company Common Shares consistent with past practice in an amount not to exceed $2 million in the aggregate (the amount of such dividends for which the record date is after the date hereof and at or prior to the Closing, the “Quarterly Dividend Amount” ), (3) dividends or other distributions to the Company by any directly or another direct or indirect indirectly wholly owned Subsidiary of the Company, or (4) without duplication of the amounts described in clauses (2) and (3), any dividends or other distributions necessary for the Company to maintain its status as a REIT under the Code and avoid the imposition of income or excise Tax (including the Minimum Distribution Dividend); (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly owned Subsidiary of the Company); or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company, except as required by the Organizational Documents of the Company or any Subsidiary of the Company or any Employee Benefit Plan of the Company, except in each case, existing as of the date hereof (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on granted following the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, Agreement in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant this Agreement, as applicable, as of the date hereof);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) than the issuance or delivery of Company Common Stock Shares upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards Award or Company Warrants outstanding on the date hereof in accordance with the terms of other awards granted under the Company Stock Plan Equity Plans and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;
(iii) amend or propose to (A) amend the Company’s Organizational Documents or Documents, (B) amend the Organizational Documents of any of the Company’s Subsidiaries in a manner that would reasonably be expected to adversely impact Parent or prevent or delay the consummation of the Transactions, or (C) waive for any Person, or exempt any Person from, or establish or increase any Excepted Holder Limit (as defined in the Company’s Organizational Documents) for any Person with respect to, any of the restrictions on transfer and ownership of shares of beneficial interest of the Company Subsidiaryset forth in the Company’s Organizational Documents;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than the merger, consolidation, combination or amalgamation of a wholly owned Subsidiary of the Company with the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any assets or any business or any corporation, partnership, association or other business organization or division thereof, in each case other than in the ordinary course of business as currently conducted or transactions between the Company and a wholly owned Subsidiary of the Company or between or among wholly owned Subsidiaries of the Company;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue lease or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) assets, other than sales, leases or dispositions of assets that, (A) if other in the ordinary course of business consistent with past practice, do not involve consideration in excess of $1,000,000 individually or $2,000,000 in the aggregate or (B) are required pursuant to a Contract of the Company or any of its Subsidiaries as in effect on prior to the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the CodeAgreement;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation such transactions among the Company and any wholly owned Subsidiary of the Company or dissolution of dormant between or among wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material its accounting principles, practices or methods, except as required by GAAP or applicable Law;
(viii) except (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxesordinary course of business consistent with past practice, (B) change an annual Tax accounting period with respect to material Taxes, if required by Law or (C) adopt if and to the extent necessary (other than in 1) to preserve the Ordinary CourseCompany’s or any Subsidiary’s qualification as a REIT under the Code or (2) to qualify or preserve the status of any Subsidiary of the Company as a disregarded entity or partnership for U.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt or change any Tax accounting methodperiod or material method of Tax accounting, (D) file any material amended Tax Return that is reasonably likely to if the filing of such amended Tax Return would result in a material increase in the Taxes payable by the Company or any of its Subsidiaries, settle or compromise any material liability for Taxes or any Tax audit or other Action relating to a Tax liability (other than as required pursuant to a “determination” within the meaning material amount of Section 1313(a) of the Code (or any analogous provision of stateTaxes, local or foreign Law)), (E) enter into any closing or similar agreement with respect to material Taxesany Taxing Authority, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount material refund of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refundsTaxes, or (G) agree to an any extension or waiver of the statute of limitations with respect to the assessment or determination a material amount of any material Tax (other than in the Ordinary Course)Taxes;
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former trustee, director, member, manager, officer, employee or other individual service provider of the Company or any pension, retirement allowance of its Subsidiaries any compensatory payment or other benefit not required by the terms of any Company Plan as in effect existing as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (FB) establish any Company new Employee Benefit Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not Agreement if such amendment would have the effect of enhancing or increasing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Personthereunder; or (C) create grant any Encumbrances on any property material increase in the compensation payable or assets of the Company or to become payable to any of its Subsidiaries in connection with trustees, directors, members, managers, officers or any Indebtedness thereofother employees; provided, other than Permitted Encumbrances;
(xi) (A) enter into any Contract that would no action will be a Company Contract violation of this Section 6.1(b)(ix) if it were is (1) taken pursuant to Section 3.2 or as permitted under Section 6.1(b)(ii), (2) taken in effect order to comply with applicable Law, or (3) required by, and taken pursuant to, a Company Plan in existence on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company ContractAgreement;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person, or amend, modify or waive any material rights under any loan or investment, except (A) for transactions involving Company Loans and Company Investments in the ordinary course of business (including funding of commitments made thereunder) or (B) for loans among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries;
(xi) enter into any Contract that would be a Company Contract or modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract in any material respect, except (A) in the ordinary course of business consistent with past practice and as would not prevent or materially delay the consummation of the Transactions, (B) entry into any agreements in connection with the making of loans as and to the extent permitted by Section 6.1(b)(x), and (C) any termination or renewal in accordance with the terms of any existing Company Contract that occurs automatically without any action (other than notice of renewal) by Company or any Subsidiary of the Company;
(xii) settle, or offer or propose to settle, any Action (excluding any audit, claim or other Action in respect of Taxes);
(xiii) place in custody or trust with, or otherwise deliver or commit to deliver to, any Person any amounts for the purpose of funding any indemnification obligations or advancing any expenses related to such indemnification obligations, in each case, other than such advancements or reimbursements that are required by the Advisor Agreement, the Indemnification Agreements or Organizational Documents of the Company;
(xiv) take any action, or knowingly fail to take any action, which action or failure would reasonably be expected to cause the Company to fail to qualify as a REIT or any of its Subsidiaries to cease to be treated as any of (A) a partnership or disregarded entity for U.S. federal income tax purposes or (B) a Qualified REIT Subsidiary, a Taxable REIT Subsidiary or a subsidiary REIT under the applicable provisions of Section 856 of the Code, as the case may be;
(xv) other than in the ordinary course of business consistent with past practice, make or agree to make any new capital expenditure or expenditures that, individually, is in excess of $1,000,000 or, in the aggregate, are in excess of $2,000,000;
(xvi) other than in the ordinary course of business consistent with past practice, incur, create, assume, refinance, replace or prepay in any material respects the terms of any Indebtedness of the Company or any of its Subsidiaries or any derivative financial instruments or arrangements of the Company or any of its Subsidiaries, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise); provided, that the foregoing shall not restrict (A) the incurrence of any Indebtedness among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, or (B) guarantees by the Company of Indebtedness of its wholly owned Subsidiaries or guarantees by the wholly owned Subsidiaries of the Company of Indebtedness of the Company or any other wholly owned Subsidiaries of the Company, which Indebtedness is incurred in compliance with this clause (xvi);
(xvii) enter into any new line of business;
(xviii) take any action, or fail to use commercially reasonable efforts take any action, which action or failure would reasonably be expected to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, cause the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to or any of the material assets, operations and activities Subsidiaries of the Company and its Subsidiaries to be required to be registered as currently in effect as of an investment company under the date hereofInvestment Company Act; or
(xix) agree or enter into any arrangement or understanding to take any action that is prohibited by this Section 6.1(b).
(c) Not earlier than seven (7) Business Days nor later than five (5) Business Days before the Closing, the Company shall deliver to Parent a good faith estimate of Company Transaction Expenses (such amount, the “Closing Company Transaction Expenses” ), with the amount of Closing Company Transaction Expenses updated by the Company as of immediately prior to the Closing.
(d) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company or any of its Subsidiaries from taking any action, at any time or from time to time, that in the reasonable judgment of the Company, upon advice of counsel, is reasonably necessary for the Company to (i) maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the Effective Time, (ii) avoid incurring entity level income or excise Taxes under the Code or applicable state or local Law, including making dividend or other distribution payments to the Company Shareholders in accordance with this Agreement or otherwise or (iii) avoid being required to register as an investment company under the Investment Company Act; provided that prior to taking any action under this paragraph, the Company shall provide Parent with reasonable advance notice of any proposed action and shall in good faith discuss such proposed action with Parent.
Appears in 1 contract
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, use reasonable best efforts to conduct its businesses in the Ordinary Courseordinary course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its material significant customers, suppliers, licensors, licensees, distributors, lessors and others having material significant business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that the Company shall, as promptly as reasonably practicable, inform Parent of such condition and any such actions taken pursuant to the prior proviso.
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or another direct or indirect wholly wholly-owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date existing and disclosed to Parent as of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise any Time-Based Restricted Stock or settlement of any Company Equity Awards or Company Warrants Performance-Based Restricted Stock outstanding as of the date hereof, or issued after the date hereof in accordance with this Agreement, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereofagreements;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards shares of Time-Based Restricted Stock or Company Warrants Performance-Based Restricted Stock outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereofagreements; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly wholly-owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly wholly-owned Subsidiary of the Company; and (C) shares of capital stock issued as a dividend made in accordance with Section 6.1(b)(i);
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than between wholly-owned Subsidiaries of the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof, in each case other than acquisitions for which the consideration is less than $25,000,000 individually or in the aggregate;
(v) sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, or agree to sell, lease, transfer, farmout, license, Encumber (other than Permitted Encumbrances), discontinue or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) properties; other than (A) pursuant to a Contract of sales, leases or dispositions for which the Company consideration is less than $25,000,000 in the aggregate or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (C) the sale or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Course, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 in the aggregate, or (E) the sale of Bitcoin Hydrocarbons in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result ordinary course of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codebusiness;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly such transactions among wholly-owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) except (Ai) make (other than in the Ordinary Course)ordinary course of business and consistent with past practice, (ii) resulting from a change in or otherwise required by Law, or (iii) to the extent not material: make, change or revoke any material election relating to TaxesTax election, (B) change an annual Tax accounting period with respect to material Taxesperiod, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of stateReturn, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any material Tax claim, audit, assessment or dispute or dispute, surrender any right to claim a refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any Tax, or take any action which is reasonably likely to result in a material Tax (other than increase in the Ordinary Course)Tax liability of the Company or its Subsidiaries;
(ix) (A) grant any material increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, officers or key employees or other service providers, except as required by applicable Law, as required by the terms of Law or pursuant to a Company Plan as in effect existing as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensationhereof, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; benefits under any Company Plan, (C) grant any new equity-based or non-equity awards, or amend or modify the terms of any outstanding equity-based or non-equity awards, pay under any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; Company Plan, (D) pay or agree to pay to any current or former director, officerofficer or key employee making an annualized salary of more than $300,000, employee whether past or other service provider present, any material pension, retirement allowance or other employee benefit not required by the terms any of any Company Plan as in effect existing as of the date hereof; (E) enter into any new, or amend any existing, material employment or severance or termination agreement with any current or former director, officer, officer or key employee or other service provider, other making an annualized salary of more than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law300,000; (FE) establish any material Company Plan which was not in existence or approved by the Company Board prior to the date of this Agreement, or amend any such plan or terminate any Company Plan arrangement in existence on the date of this Agreement, other than (I) amendments that do not Agreement if such amendment would have the effect of enhancing any compensation or benefits thereunder or otherwise resulting result in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plansCompany; (GF) hire or promote any employee or engage any other service provider independent contractor (who is a natural person) who has (with annual salary or would have) a title of Vice President wage rate or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) consulting fees in excess of $200,000300,000; or (HG) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, executive officer other than for cause; provided, however, that notwithstanding the foregoing in this Section 6.1(b)(ix), in no event shall the Company be permitted to increase, in any respect, the compensation and benefits payable to the individuals participating in the Company’s Executive Change in Control and Severance Benefit Plan as of the date hereof, or (I) otherwise enter intointo any new, or amend or terminate any collective bargaining agreement or other similar labor existing, agreement with a union or other similar labor organization, except as required by applicable Lawsuch persons;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy repurchase or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries)6.625% Senior Notes due 2022; (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; Person or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing clauses (B) and (C) shall not restrict the incurrence of Indebtedness (1) under existing credit facilities, (2) by the Company that is owed to any wholly-owned Subsidiary of the Company or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, (3) incurred or assumed in connection with any acquisition permitted by Section 6.1(b)(iv), (4) additional Indebtedness in an amount not to exceed $3,000,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4);
(xi) (A) enter into any Contract contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release waive or assign any rights, claims or benefits rights under, any Company ContractContract (including the renewal of existing Company Contract on substantially the same terms in the ordinary course of business consistent with past practice), other than in each case, with respect to Sections 4.19(a)(vii), (x), and (xi) only, in the ordinary course of business consistent with past practice;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its SubsidiariesSubsidiaries having in each case a value in excess of $5,000,000 in the aggregate;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than (A) the settlement of such Proceedings that (A) involve proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 5,000,000 in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), and (B) do as would not impose result in any restrictions or limitations upon the assets, operations, business restriction on future activity or conduct of the Company or any of its Subsidiaries a finding or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any a violation of its SubsidiariesLaw; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.106.11;
(xiv) make or commit to make any capital expenditures other that are, in the aggregate greater than (x) 125% of the quarterly budgeted amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget set forth in Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable)environment;
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xixxvii) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Samples: Merger Agreement (RSP Permian, Inc.)
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, conduct its businesses in the Ordinary Courseordinary course, including by using commercially reasonable efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees organization and preserve its existing relationships with its material key customers, suppliers, licensors, licensees, distributors, lessors creditors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentemployees; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, or other securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of specific events) into or exchangeable for any shares of capital stock of, the Company or its Subsidiaries, except for (1) dividends or distributions required by the Organizational Documents of any Subsidiary of the Company and (2) dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date of this Agreement, (y) or as required contemplated by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or Benefit Plan (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of including any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereofAward);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery issuance of Company Common Stock upon the vesting ofvesting, settlement, exercise of or lapse of any restrictions on any Company Equity Awards or granted under the Company Warrants Equity Plan and outstanding on the date hereof or issued in compliance with clause (B) below; (B) issuances of Company Equity Awards under the Company Equity Plans in accordance with the express terms of the Company Disclosure Letter; (C) the issuance of Company Common Stock upon the conversion of shares of the Company Preferred Stock into shares of Company Common Stock in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as Certificate of the date hereofDesignations; (BD) the sale of shares of Company Common Stock capital stock or other equity issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, as a dividend made in each case, if necessary to effectuate exercise or the withholding of Taxesaccordance with Section 6.1(b)(i); and (CE) issuances by transactions solely between the Company and a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other solely between wholly owned Subsidiary Subsidiaries of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to adopt any material change in the Organizational Documents of any of the Company’s material Subsidiaries or otherwise take any action to exempt any Person from any provision of the Organizational Documents of the Company Subsidiaryor any of its Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, exchanging, licensing, or by any other manner), any properties, assets, business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) any such action solely between or among the Company and its Subsidiaries or between or among Subsidiaries of the Company, (2) acquisitions of inventory or other assets in the ordinary course of business consistent with past practice or pursuant to existing contracts or (3) acquisitions for which the consideration is $1,000,000 individually or $5,000,000 in the aggregate or less;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract an agreement of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; Agreement, (B) non-exclusive licenses among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of Intellectual Property in the Ordinary Course; Company, (C) sales, leases, exchanges or dispositions for which the sale consideration and fair value is $1,000,000 individually or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete $5,000,000 in the Ordinary Course, aggregate or less or (D) the sale or disposition sales of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 Hydrocarbons made in the aggregate, or (E) the sale ordinary course of Bitcoin in the Ordinary Coursebusiness; provided that the Company shall not be permitted to sell any asset if, if as a result of such sale, sale the Company would fail the “the substantially-all test” of Code Section 368(a) of the Code);
(vi) consummate, authorize, recommend, propose, enter into, adopt a plan propose or announce an any intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation such transactions solely among the Company and any Subsidiaries of the Company or dissolution of dormant wholly owned solely among Subsidiaries of the Company;
(vii) change in any material respect their material financial accounting principles, practices or methodsmethods that would affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Courseordinary course of business), change or revoke rescind any material election relating to TaxesTaxes (including any such election for any joint venture, partnership, limited liability company or other investment where the Company has the authority to make such binding election, but excluding any such election that is made periodically and consistent with past practice) except where such election would not have a material and adverse effect on the Tax position of the Company and its Subsidiaries, (B) change an annual amend any material Tax accounting period with respect to Return, except where such amendment would not have a material Taxesand adverse effect on the Tax position of the Company and its Subsidiaries, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, claim or assessment or dispute or surrender by any right to claim a refundTaxing Authority, except where the amount of any such settlements settlement or compromises or forgone refunds compromise does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds2,500,000, or (GD) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of change any material method of Tax (other than accounting from those employed in the Ordinary Course)preparation of its Tax Returns that have been filed for prior taxable years;
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; Benefit Plan, (EA) enter into, adopt or terminate any material Company Benefit Plan, other than entering into employment agreements in the ordinary course of business, (B) amend any newCompany Benefit Plan, other than amendments in the ordinary course of business (including, for the avoidance of doubt, annual renewals of welfare benefit plans) and other than amendments that do not materially increase the cost to the Company of maintaining such Company Benefit Plan, or amend any existing, employment or severance or termination agreement with (C) materially increase the cash compensation payable to any current or former employee or director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form except in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment ordinary course of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Lawbusiness;
(x) (A) retireincur, repaycreate, defeaseassume or guarantee any Indebtedness, repurchaseother than (1) incurrences under the Company Credit Agreement in the ordinary course of business, discharge, satisfy (2) transactions solely between or redeem all among the Company and its Subsidiaries or any portion of the outstanding aggregate principal amount solely between or among Subsidiaries of the Company’s Indebtedness that has a repayment cost, “make whole” amountor, prepayment penalty or similar obligation (other than (i3) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of any Indebtedness incurred or assumed in connection with any acquisition permitted by Section 6.1(b)(iv), in an aggregate amount under this clause (x)(A)(3) not to exceed the Company purchase price of any such acquisition, and in each case guarantees thereof or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume suffer to exist any Encumbrance, other than (1) Encumbrances securing the Company Credit Agreement or other Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries existing on the date hereof or incurred in connection compliance with any Indebtedness the foregoing clause (A), in each case in accordance with the terms thereof, other than (2) Encumbrances in existence on September 30, 2018 and disclosed in the Company’s Quarterly Report on Form 10-Q for the three-months ended September 30, 2018, (3) Encumbrances securing Indebtedness incurred or assumed pursuant to clause (x)(A)(3) above, or (4) Permitted Encumbrances;
(xi) except as expressly permitted in this Section 6.1 and other than in the ordinary course of business consistent with past practice, (A) enter into or assume any Contract that would be have been a Company Contract if had it were in effect on been entered into prior to the date of this Agreement or (B) materially modifyterminate, materially amend, terminate or assign, or waivetransfer, release or assign any rightsmodify, claims or benefits supplement, deliver a notice of termination under, fail to renew, or waive or accelerate any material rights or defer any liabilities under any Company Contract or any Contract that would have been a Company Contract had it been entered into prior to the date of this Agreement, excluding any termination upon expiration of a term in accordance with the terms of such Company Contract;
(xii) cancel, modify other than the settlement of any Proceedings reflected or waive any debts or claims held by reserved against on the balance sheet of the Company (or any of its Subsidiaries or waive any rights held by in the Company or any of its Subsidiaries;
(xiii) waive, release, assignnotes thereto), settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding (A) any audit, claim or other proceeding in respect of Taxes, which shall be governed exclusively by Section 6.1(b)(viii) other than the settlement of such Proceedings that and (AB) involve only any Transaction Litigation, which shall be governed exclusively by Section 6.10)) involving solely the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 1,000,000 in the aggregate (but excluding any amounts paid on behalf of aggregate; provided, however, that neither the Company or nor any of the Company its Subsidiaries by shall settle or compromise any applicable insurance policy maintained by the Company Proceeding if such settlement or any of the Company Subsidiaries)compromise (A) involves a material conduct remedy or material injunctive or similar relief, (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the involves an admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that Subsidiaries or (C) has a materially restrictive impact on the business of the Company shall be permitted to settle or any Transaction Litigation in accordance with Section 6.10of its Subsidiaries;
(xivxiii) authorize or make or commit to make any capital expenditures other that are in the aggregate greater than one hundred twelve and one half percent (x112.5%) of the aggregate amount of capital expenditures permitted by scheduled to be made in the Company’s capital expenditure budget for the applicable quarter of 2018 and 2019, except to the extent such operations are specifically described in Schedule 6.1(b)(xiv6.1(b)(xiii) of the Company Disclosure Letter and (y) Letter, except, in each case, for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment environment;
(provided xiv) hire any executive officer or any employees, consultants or other independent contractors (other than for the purpose of filling current openings or backfilling positions that become open after the Company shall notify Parent date hereof) receiving annual salary or annual guaranteed compensation in excess of any such expenditure as soon as reasonably practicable)$175,000, individually, or $750,000, in the aggregate;
(xv) take (A) enter into any actionlease for real property that would be a Company Material Real Property Lease if entered into prior to the date hereof or (B) terminate, cause any action to be takenamend, knowingly assign, transfer, modify, supplement, deliver a notice of termination under, fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impederenew, or would be reasonably likely to prevent waive or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Codeaccelerate any rights or defer any liabilities under any Company Material Real Property Lease;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any in all material Company Insurance Policies (respects, or substantially similar replacements thereto); provided that in the event of a termination, cancellation fail to replace or lapse of any material Company Insurance Policyrenew, the Company shall use commercially reasonable efforts to promptly obtain replacement material insurance policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently to the extent commercially reasonable in effect as the Company’s business judgment in light of prevailing conditions in the date hereofinsurance market; or
(xixxvii) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable LawLaw (including any COVID-19 Measures), (iv) as expressly required by the rules and regulations of Nasdaq or Cboe Canada or Prepackaged Plan if the terms of a Company PlanChapter 11 Cases have been commenced, or (ivv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, use reasonable best efforts to conduct its businesses in the Ordinary Courseordinary course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its material significant customers, suppliers, licensors, licensees, distributors, lessors and others having material significant business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environment; provided, further, however, that no action or inaction by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this AgreementAgreement (including Section 6.4), (iii) as may be required by applicable Law or any Governmental Entity, (iv) as expressly required by the rules and regulations of Nasdaq or Cboe CanadaPrepackaged Plan if the Company Chapter 11 Cases have been commenced, or (ivv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends (whether in cash, stock or property or any combination thereof) on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company (or pro rata dividends and distributions payable to holders of interests in non-wholly owned Subsidiaries) to the Company or another direct or indirect wholly owned Subsidiary of the Company; , (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company Subsidiary outstanding on the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) existing and disclosed to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, Parent as of the date hereof;
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: than (A) the delivery of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company, and (B) shares of capital stock issued as a dividend made in accordance with Section 6.1(b)(i);
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any Company Subsidiaryof the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than between wholly owned Subsidiaries of the Company or (B) acquire or agree to acquire or make an investment in (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner)) any assets, any business properties, operations or businesses or any corporation, partnership, association or other business organization or division thereof, other than acquisitions of inventory, equipment or other similar assets in the ordinary course of business or pursuant to existing Contracts;
(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Company Contract of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed Agreement, sales, leases, exchanges or dispositions for which the consideration is less than $100,000 individually or $1,000,000 in Schedule 6.1(b)(v) of the Company Disclosure Letter; aggregate, (B) non-exclusive licenses among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of Intellectual Property in the Ordinary Course; Company, (C) the sale sales or other disposition dispositions of obsolete or worthless equipment deemed by the Company in its reasonable business judgment to be obsolete in the Ordinary Courseordinary course of business consistent with past practice, (D) the sale or disposition of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 Hydrocarbons in the aggregateordinary course of business, or (E) the sale swaps of Bitcoin assets or property, which may include cash consideration, of up to $175,000 in the Ordinary Course; provided that the Company shall not be permitted to sell any asset if, as a result of aggregate for all such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codeswap transactions;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant such transactions among wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material its financial accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Course)make, change or revoke any material Tax election, but excluding any election relating to Taxesthat must be made periodically and is made consistent with past practice, (B) change an annual Tax accounting period with respect to material Taxesperiod, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of stateReturn, local or foreign Law)), (E) enter into any material closing agreement with respect to material Taxes, (F) settle or compromise any Tax claimmaterial Proceeding regarding any Taxes, audit, assessment or dispute or surrender any right to claim a refund, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refunds, or (G) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other than in the Ordinary Course)refund;
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this Agreement, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(x) (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances;
(xi) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement or (B) materially modify, materially amend, terminate or assign, or waive, release or assign any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries;
(xiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) other than the settlement of such Proceedings that (A) involve only the payment of monetary damages by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf of the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries or any equitable or injunctive remedies on the Company or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would could prevent or impede, or would could reasonably be reasonably likely expected to prevent or impede, the Merger from qualifying as a reorganization “reorganization” within the meaning of Section 368(a) of the Code;
(x) except as required pursuant to an existing Company Benefit Plan, (A) grant or commit to grant any new increases in the compensation, bonus, severance, termination pay or other benefits payable or that may become payable to any of its current or former directors, officers, or employees at or above the level of vice president except as required by applicable Law or as is provided to a newly hired employee as permitted hereunder (and so long as such newly hired employee’s compensation and other terms are comparable to those of the employee that he or she is replacing), (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, (C) grant or commit to grant any equity-based awards, (D) enter into any new, or amend any existing, offer letter or employment or severance or termination agreement with any director, officer or employee at or above the level of vice president, (E) pay or commit to pay any bonuses, other than the payment of annual or other short-term cash bonuses for completed performance periods, (F) establish, enter into or adopt any material Company Benefit Plan which was not in existence as of the date of this Agreement (or any arrangement that would be a Company Benefit Plan if it had been in existence as of the date of this Agreement), or amend or terminate any Company Benefit Plan, in each case, except for changes to the contractual terms of health and welfare plans made in the ordinary course of business that do not result in a material increase in cost to the Company, or (G) hire or terminate (other than for cause) any employee, except as is reasonably necessary to replace any employee;
(xi) recognize any labor union, works council, or other labor organization as the bargaining representative of any employees;
(xii) (A) retire, repay, defease, repurchase or redeem all or any portion of the Company Amended Credit Facility or Company Senior Notes, (B) incur, create, assume, waive or release any Indebtedness or guarantee any such Indebtedness of another Person or (C) incur, create, assume, waive or release any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that (1) the foregoing clauses (B) and (C) shall not restrict the incurrence of Indebtedness under existing credit facilities or (2) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clause (1);
(xiii) (A) enter into any Contract that would be a Company Contract if it were in effect on the date of this Agreement, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of existing Company Contracts on substantially the same terms in the ordinary course of business consistent with past practice), other than in each case, with respect to Contracts of the type described in Section 4.19(a)(viii) only, in the ordinary course of business consistent with past practice;
(xiv) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries having a value in excess of $200,000 individually or $1,000,000 in the aggregate;
(xv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceedings (excluding any Proceeding in respect of Taxes) except solely for monetary payments of no more than $200,000 individually or $1,000,000 in the aggregate, net of applicable insurance payments, recoveries or proceeds, or on a basis that would (A) prevent or materially delay consummation of the Merger or the Transactions, or (B) result in the imposition of any term or condition that would restrict the future activity or conduct of Parent or its Subsidiaries or a finding or admission of a violation of Law;
(xvi) make or commit to make any capital expenditures, except for capital expenditures made pursuant to and in accordance with the Company’s capital expenditure budget for the period indicated as set forth in Schedule 6.1(b)(xvi) of the Company Disclosure Letter or capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $250,000 in the aggregate required on an emergency basis or for the safety of individuals, assets or the environments in which individuals perform work for the Company and its Subsidiaries (provided that the Company shall notify Parent of any such emergency expenditure as soon as reasonably practicable);
(xvii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the insurance policies of the Company and its Subsidiaries at a level at least comparable to current levels or otherwise in a manner inconsistent with past practice;
(xviii) make any changes with respect to material accounting policies, expect as required by changes in GAAP, CXXXX standards or by applicable Law;
(xix) unwind, cancel, defease or otherwise terminate any Derivative Transaction, including any commodity hedging arrangement or related Contract;
(xx) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (or substantially similar replacements thereto); provided that in the event of a termination, cancellation or lapse of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently in effect as of the date hereof; or
(xixxxi) agree to commit to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Conduct of Company Business Pending the Merger. 36
(a) Except The Company covenants and agrees that until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, except as (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, including Annex B, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq or Cboe Canada or the terms of a Company Plan, Law or (iv) as otherwise consented to by Parent in writing writing, (which consent shall not be unreasonably withheld, delayed or conditioned), A) the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to to, use its commercially reasonable efforts to, to conduct its businesses in the Ordinary Course, preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws in the ordinary course and (B) the Company Contracts, and shall maintain in effect all existing material Company Permits, keep available the services of its current officers and employees and preserve its existing relationships with its material customers, suppliers, licensors, licensees, distributors, lessors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, status as a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentREIT; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe CanadaLaw, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, 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 distribution (whether in cash, stock, property or otherwise) in respect of any outstanding capital stock of, or other equity interests in, the Company or any of its Subsidiaries, except for (1) dividends and or distributions required by a direct or indirect wholly owned Subsidiary the Organizational Documents of the Company or any of its Subsidiaries; (2) regular quarterly dividends payable in respect of the Company Common Stock consistent with past practice; (3) dividends or other distributions to the Company by any directly or another direct or indirect indirectly wholly owned Subsidiary of the Company; (4) without duplication of the amounts described in clauses (1) and (3), any dividends or other distributions necessary for the Company to maintain its status as a REIT under the Code and avoid the imposition of corporate level tax under Section 857 of the Code or excise Tax under Section 4981 of the Code (including the Minimum Distribution Dividend); or (5) any dividend to the extent declared and paid in accordance with Section 6.19; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 SubsidiariesSubsidiaries (other than for transactions by a wholly owned Subsidiary of the Company); or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of the Company or any Company Subsidiary outstanding on of the Company, in each case, existing as of the date hereof (or granted following the date of this Agreement, (y) as required by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or (z) to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, Agreement in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant this Agreement, as applicable, as of the date hereof);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery than shares of Company Common Stock upon the vesting of, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof capital stock issued as a dividend made in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereof; (B) the sale of shares of Company Common Stock issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, in each case, if necessary to effectuate exercise or the withholding of Taxes; and (C) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;Section 6.1(b)(i).
(iii) amend or propose to amend the Company’s 's Organizational Documents or the Organizational Documents of any Company Subsidiaryof the Company's Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another Subsidiary of the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue sell or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue sell or otherwise dispose of, any portion of its assets or properties (including Intellectual Property) other than (A) pursuant to a Contract of any asset or property that is held as "real estate owned" or "REO," unless (x) the Company asset or any of its Subsidiaries as in effect on the date of this Agreement and property is listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; , (B) non-exclusive licenses of Intellectual Property in the Ordinary Course; (Cy) the sale or other disposition of equipment deemed by the Company applicable REO asset or property, taken together with all other relevant transactions, qualifies for the safe harbor described in its reasonable business judgment Section 857(b)(6)(C) of the Code; provided, however, that any sale of an REO asset or property that is listed in Schedule 6.1(b)(v) and that is as of the date hereof, and continues to be obsolete be, held in the Ordinary Coursea Taxable REIT Subsidiary, need not satisfy such safe harbor, and (Dz) the sale or other disposition of immaterial assets (excluding Intellectual Property Rights) the applicable REO asset or property will not result in an amount not in excess of $250,000 increase in the aggregateMinimum Distribution Dividend payable by the Company pursuant to Section 6.19(a), or (EB) the sale of Bitcoin any other asset or property, other than (in the Ordinary Course; provided case of clause (B)) any sales or other dispositions of assets or properties (1) for which the consideration does not exceed $1,000,000 individually or $5,000,000 in the aggregate or (2) that are made in the Company shall not be permitted to sell any asset if, as a result ordinary course of such sale, the Company would fail the “substantially-all test” of Section 368(a) of the Codebusiness;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization dissolution of the Company or any of its Subsidiaries, other than consolidation, liquidation or dissolution of dormant wholly owned Subsidiaries of the Company;
(vii) change in any material respect their material accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) except (A) make (other than in the Ordinary Course), change or revoke any material election relating to Taxesordinary course of business, (B) change an annual Tax accounting period with respect to material Taxesif required by Law, or (C) if necessary (1) to preserve the Company's qualification as a REIT under the Code or (2) to qualify or preserve the status of any Subsidiary of the Company as a disregarded entity or partnership for U.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt (other than in the Ordinary Course) or change any material Tax accounting methodperiod or material method of Tax accounting, (D) file any material amended Tax Return that is reasonably likely to if the filing of such amended Tax Return would result in a material increase in the Taxes payable by the Company or any of its Subsidiaries, settle or compromise any material liability for Taxes or any Tax audit or other proceeding relating to a Tax liability (other than as required pursuant to a “determination” within the meaning material amount of Section 1313(a) of the Code (or any analogous provision of stateTaxes, local or foreign Law)), (E) enter into any closing or similar agreement with respect to material Taxesany Taxing Authority, (F) settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, except where the amount material refund of any such settlements or compromises or forgone refunds does not exceed $500,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refundsTaxes, or (G) agree to an any extension or waiver of the statute of limitations with respect to the assessment or determination a material amount of any material Tax (other than in the Ordinary Course)Taxes;
(ix) (A) grant any increases increase in the compensation or benefits payable or to become payable to any of its current or former directors, officers, executive officers or key employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof Law or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; (E) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form in the Ordinary Course that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; (F) establish any Company Plan material employee benefit plan which was not in existence prior to the date of this Agreement, or amend any such plan or terminate any Company Plan arrangement in existence on the date of this Agreement; provided, other than (Ihowever, that no action will be a violation of this Section 6.1(b)(ix) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting if it is taken in increased costs order to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, or (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (G) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000 or comply with a title of Vice President or above, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement or other similar labor agreement with a union or other similar labor organization, except as required by applicable Law;
(xA) enter into any contract that would be a Company Contract, except as would not prevent or materially delay the consummation of the Transactions and is terminable without penalty on not more than 90 days' notice, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract in any material respect, and, for the avoidance of doubt, with respect to clauses (A) retire, repay, defease, repurchase, discharge, satisfy or redeem all or any portion of the outstanding aggregate principal amount of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (iiB), except for (1) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incurextent not prohibited by other provisions hereof, create or assume any Indebtedness or guarantee any such Indebtedness contracts providing for the origination, investment, servicing and management of another Person; or (C) create any Encumbrances on any property or assets of commercial real estate loans by the Company or any of its Subsidiaries in connection the ordinary course of business and that are materially consistent with the contracts or forms thereof provided to Parent prior to the date hereof; (2) any Indebtedness thereof, termination or renewal in accordance with the terms of any existing Company Contract that occurs automatically without any action (other than Permitted Encumbrancesnotice of renewal) by Company or any applicable Subsidiary of the Company; and (3) any Company Loans entered into, amended, terminated or assigned in the ordinary course of business;
(xi) other than the settlement of any Proceeding (A) enter into any Contract that would be a Company Contract if it were in effect reflected or reserved against on the date balance sheet of this Agreement the Company (or in the notes thereto), (B) materially modify, materially amend, terminate or assignthat would not reasonably be expected to restrict the operations of the Company and its Subsidiaries, or waive, release or assign (C) in connection with any rights, claims or benefits under, any Company Contract;
(xii) cancel, modify or waive any debts or claims held by stockholder litigation against the Company or any of and/or its Subsidiaries or waive any rights held by officers and directors relating to this Agreement, the Company or any of its Subsidiaries;
(xiii) waive, release, assignMerger and/or the other Transactions in accordance with Section 6.11, settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding any audit, claim or other proceeding in respect of Taxes) involving (1) an award of injunctive or other than equitable relief against the settlement Company or any of such Proceedings that its Subsidiaries, (A2) involve only the payment an admission of monetary damages wrongdoing by the Company or any of its Subsidiaries not exceeding $100,000 individually or in the aggregate (but excluding any amounts paid on behalf 3) a payment or other transfer of the Company or any of the Company Subsidiaries value by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or any of its Subsidiaries exceeding $1,000,000 individually, or $5,000,000 in the aggregate;
(xii) take any equitable action, or injunctive remedies on fail to take any action, which action or failure could reasonably be expected to cause the Company to fail to qualify as a REIT or any of its Subsidiaries and (C) do not involve the admission of any criminal wrongdoing by the Company or to cease to be treated as any of its Subsidiaries; provided(A) a partnership or disregarded entity for U.S. 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, that as the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10case may be;
(xiv) make or commit to make any capital expenditures other than (x) the capital expenditures permitted by Schedule 6.1(b)(xiv) of the Company Disclosure Letter and (y) capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Parent of any such expenditure as soon as reasonably practicable);
(xvxiii) take any action, cause any action to be taken, knowingly or fail to take any action or knowingly fail to cause any action to be takenaction, which action or failure to act would prevent or impede, or would could reasonably be reasonably likely expected to prevent or impede, impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvixiv) take other than in the ordinary course of business incur, create, assume, refinance, replace or prepay in any action material respects the terms of any Indebtedness or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances derivative financial instruments or capital contributions toarrangements, or investments inissue or sell any debt securities or calls, options, warrants or other rights to acquire any other Person;
debt securities (xviii) fail to use commercially reasonable efforts to maintain in full force and effect any material Company Insurance Policies (directly, contingently or substantially similar replacements theretootherwise); provided provided, however, that in the event of a termination, cancellation or lapse foregoing shall not restrict (A) the incurrence of any material Company Insurance Policy, the Company shall use commercially reasonable efforts to promptly obtain replacement policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of Indebtedness among the Company and its wholly owned Subsidiaries as currently in effect as and/or wholly owned Subsidiaries of the date hereofOperating Partnership or among the Company's wholly owned Subsidiaries and/or wholly owned Subsidiaries of the Operating Partnership, (B) the incurrence of any Indebtedness in connection with funding Company Loans originated in the ordinary course of business or (C) the repayment of Indebtedness in the ordinary course of business;
(xv) take any action, or fail to take any action, which action or failure (A) would be inconsistent with the requirements specified in Annex B or (B) would reasonably be expected to cause the Company or any of the Company's Subsidiaries to be required to be registered as an investment company under the Investment Company Act; or
(xixxvi) agree to take any action that is prohibited by this Section 6.1(b). Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company or any of its Subsidiaries from taking any action, at any time or from time to time, that in the reasonable judgment of the Company, upon advice of counsel, is reasonably necessary for the Company to (i) maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the Effective Time, (ii) avoid incurring entity level income or excise Taxes under the Code or applicable state or local Law, including making dividend or other distribution payments to the Company Stockholders in accordance with this Agreement or otherwise, or (iii) avoid being required to register as an investment company under the Investment Company Act.
Appears in 1 contract
Conduct of Company Business Pending the Merger. 36
(a) Except (i) as set forth on Schedule 6.1(a) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law, the rules and regulations of Nasdaq Law or Cboe Canada or the terms of a Company Plan, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheldafter consultation with the Company, delayed or conditionedif practicable), the Company covenants and agrees that, until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, it shall use its commercially reasonable efforts toshall, and shall cause each of its Subsidiaries to use its commercially reasonable efforts to, (i) comply with applicable Law in all material respects and (ii) conduct its businesses in the Ordinary Courseordinary course, including by using commercially reasonable efforts to preserve substantially intact its present business organization, goodwill and assets, comply in all material respects with applicable Laws and the Company Contracts, and maintain in effect all existing material Company Permits, keep available the services of its current officers and employees organization and preserve its existing relationships with its material key customers, suppliers, licensors, licensees, distributors, lessors creditors and others having material business dealings with it; provided that this Section 6.1(a) shall not prohibit the Company and any of the Company Subsidiaries from taking commercially reasonable actions outside of the Ordinary Course in response to an emergency condition that presents, or is reasonably likely to present, a significant risk of imminent harm to human health, any material property or asset of the Company or any of the Company Subsidiaries or the environmentemployees; provided, further, however, that no action by the Company shall, as promptly as reasonably practicable, inform Parent or its Subsidiaries with respect to the 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 condition and any such actions taken pursuant to the prior provisoother provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule 6.1(b) 6.1 of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement, as may be required by applicable Law or the rules and regulations of Nasdaq or Cboe Canada, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheldafter consultation with the Company, delayed or conditionedif practicable), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, VIII the Company shall not, and shall not permit its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, or other securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of specific events) into or exchangeable for any shares of capital stock of, the Company or its Subsidiaries, except for (1) dividends or distributions required by the Organizational Documents of any Subsidiary of the Company and (2) dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, 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 (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except (x) as required by the terms of any capital stock or equity interest of any Company a Subsidiary outstanding on the date of this Agreement, (y) or as required contemplated or permitted by the terms of any Company Equity Awards or Company Warrants outstanding on the date hereof or issued in accordance with this Agreement, or Benefit Plan (z) including any award agreement applicable to satisfy any applicable Tax withholding in respect of the vesting, exercise or settlement of any Company Equity Awards or Company Warrants outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements or the Company Warrant Agreement, as applicable, as of the date hereofAward);
(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery issuance of Company Common Stock upon the vesting ofvesting, settlement, exercise of or lapse of any restrictions on any Company Equity Awards or Company Warrants outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements or Company Warrant Agreement as of the date hereofhereof that were granted under the Company Equity Plans; (B) issuances of New Company PSU Awards pursuant to Section 3.2(c) of this Agreement; (C) the sale of shares of Company Common Stock capital stock or other equity issued pursuant to the exercise or vesting of Company Equity Awards or Company Warrants outstanding on the date hereof, as a dividend made in each case, if necessary to effectuate exercise or the withholding of Taxesaccordance with Section 6.1(b)(i); and (CD) issuances by transactions solely between the Company and a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other solely between wholly owned Subsidiary Subsidiaries of the Company;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to adopt any material change in the Organizational Documents of any of the Company’s material Subsidiaries or otherwise take any action to exempt any Person from any provision of the Organizational Documents of the Company Subsidiaryor any of its Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or announce, authorize, propose or recommend any such merger, consolidation, combination or amalgamation (other than the Merger) or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, exchanging, licensing, or by any other manner), any properties, assets, business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) any such action solely between or among the Company and its Subsidiaries or between or among Subsidiaries of the Company, (2) acquisitions of inventory or other assets in the ordinary course of business consistent with past practice or pursuant to existing contracts or (3) acquisitions for which the consideration is $2,000,000 individually or $8,000,000 in the aggregate or less;
(v) sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, or agree to sell, lease, transfer, license, Encumber (other than Permitted Encumbrances), discontinue exchange or otherwise dispose of, any material portion of its assets or properties (including Intellectual Property) properties, other than (A) pursuant to a Contract an agreement of the Company or any of its Subsidiaries as in effect on the date of this Agreement and listed in Schedule 6.1(b)(v) of the Company Disclosure Letter; Agreement, (B) non-exclusive licenses among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of Intellectual Property in the Ordinary Course; Company, (C) sales, leases, exchanges or dispositions for which the sale consideration and fair value is $2,000,000 individually or other disposition of equipment deemed by the Company in its reasonable business judgment to be obsolete $8,000,000 in the Ordinary Course, aggregate or less or (D) the sale or disposition sales of immaterial assets (excluding Intellectual Property Rights) in an amount not in excess of $250,000 Hydrocarbons made in the aggregate, or (E) the sale ordinary course of Bitcoin in the Ordinary Coursebusiness; provided that the Company shall not be permitted to sell any asset if, if as a result of such sale, sale the Company would fail the “the substantially-all test” of Code Section 368(a) of the Code);
(vi) consummate, authorize, recommend, propose, enter into, adopt a plan propose or announce an any intention to adopt a plan of complete or partial liquidation or dissolutiondissolution of the Company or any of its Subsidiaries, merger, consolidation, or a restructuring, recapitalization or other reorganization of the Company or any of its SubsidiariesSubsidiaries of a similar nature, other than consolidation, liquidation such transactions among the Company and any Subsidiaries of the Company or dissolution of dormant wholly owned among Subsidiaries of the Company;
(vii) change in any material respect their material financial accounting principles, practices or methodsmethods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) make (other than in the Ordinary Courseordinary course of business consistent with past practice), change or revoke rescind any material election relating to TaxesTaxes (including any such election for any joint venture, partnership, limited liability company or other investment where the Company has the authority to make such binding election), (B) change an annual amend any material Tax accounting period with respect to material TaxesReturn, (C) adopt (other than in the Ordinary Course) or change any material Tax accounting method, (D) file any material amended Tax Return that is reasonably likely to result in a material increase to a Tax liability (other than as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign Law)), (E) enter into any closing agreement with respect to material Taxes, (F) settle or compromise any Tax claim, audit, claim or assessment or dispute or surrender by any right to claim a refundTaxing Authority, except where the amount of any such settlements or compromises or forgone refunds does not exceed $500,000 2,000,000 in the aggregate and, for the absence of doubt, the Company and its Subsidiaries shall act reasonably in reaching such settlements or compromises or in forgoing such refundsaggregate, or (GD) agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of change any material method of Tax (other than accounting from those employed in the Ordinary Course)preparation of its Tax Returns that have been filed for prior taxable years;
(ix) (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other service providers, except as required by applicable Law, as required by the terms of a Company Plan as in effect as of the date hereof or in the Ordinary Course in connection with promotions in respect of employees whose annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) is less than $200,000; (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits; (C) grant any new equity-based or non-equity awards, amend or modify the terms of any outstanding equity-based or non-equity awards, pay any incentive or performance-based compensation or benefits or approve treatment of outstanding equity awards in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.2; (D) pay or agree to pay to any current or former director, officer, employee or other service provider any pension, retirement allowance or other benefit not required by the terms of any Company Plan as in effect as of the date hereof; Benefit Plan, (EA) enter into into, adopt or terminate any new, or amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service providermaterial Company Benefit Plan, other than (I) amendments that do not have the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs to the Company or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000, or imposing restrictions on the Company or its Subsidiaries, (II) entering into offer letters with employees permitted to be hired pursuant to Section 6.1(b)(ix)(G) on the Company’s standard form employment agreements in the Ordinary Course ordinary course of business that can be terminated within thirty (30) days without penalty or payment of severance in excess of any severance required by applicable Law; severance, (FB) establish amend any Company Plan which was not in existence prior to the date of this Agreement, or amend or terminate any Company Plan in existence on the date of this AgreementBenefit Plan, other than amendments in the ordinary course of business (Iincluding, for the avoidance of doubt, annual renewals of welfare benefit plans) amendments that do not have materially increase the effect of enhancing any compensation or benefits thereunder or otherwise resulting in increased costs cost to the Company of maintaining such Company Benefit Plan, (C) increase the compensation payable to any current or its Subsidiaries in an aggregate annual amount as a result of all such amendments in excess of $100,000former employee or director, (D) grant or award, or imposing restrictions on the Company pay or its Subsidiariesaward, any severance or termination pay, bonuses, retention or incentive compensation, to any current or former employee or director, (II) immaterial changes or amendments made as a result of annual enrollment or annual renewal of welfare plans or restatements of such plans; (GE) hire or promote any employee or engage any other service provider (who is a natural person) who has (or would have) a title of Vice President or above or who has (or would have) an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $200,000; (H) terminate the employment of any employee with an annual base salary greater than or other service provider who has an annualized target compensation opportunity (including base compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of equal to $200,000 125,000 or with a title of Vice President equal to director or above, in each case, other than terminations for cause; (F) provide any funding for any rabbi trust or similar arrangement, or (IG) enter into, into or amend or terminate any collective bargaining agreement or other works council or similar labor agreement with a union or other similar labor organization, except as required by applicable Lawagreement;
(x) (A) retireincur, repaycreate, defeaseassume or guarantee any Indebtedness, repurchase, discharge, satisfy other than (1) incurrences under the Company Credit Agreement in the ordinary course of business in an aggregate amount under this clause (x)(A)(1) that would not cause outstanding borrowings under the Company Credit Agreement to exceed $200,000,000 or redeem all (2) transactions solely between or any portion of among the outstanding aggregate principal amount Company and its Subsidiaries or solely between or among Subsidiaries of the Company’s Indebtedness that has a repayment cost, “make whole” amount, prepayment penalty and in each case guarantees thereof or similar obligation (other than (i) breakage, funding, indemnity or similar costs and (ii) retirements, repayments, discharges and satisfactions in the Ordinary Course of Indebtedness incurred by the Company or its direct or indirect wholly owned Subsidiaries and owed to the Company or its direct or indirect wholly owned Subsidiaries); (B) incur, create or assume suffer to exist any Encumbrance, other than (1) Encumbrances securing the Company Credit Agreement or other Indebtedness or guarantee any such Indebtedness of another Person; or (C) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries existing on the date hereof or incurred in connection compliance with any Indebtedness the foregoing clause (A), in each case in accordance with the terms thereof, other than (2) Encumbrances in existence on June 30, 2019 and disclosed in the Company’s Quarterly Report on Form 10-Q for the three-months ended June 30, 2019 or (3) Permitted Encumbrances;
(xi) except as expressly permitted in this Section 6.1 and other than in the ordinary course of business consistent with past practice, (A) enter into or assume any Contract contract that would be have been a Company Contract if (excluding any Company Benefit Plan) had it were in effect on been entered into prior to the date of this Agreement or (B) materially modifyterminate, materially amend, terminate or assign, or waivetransfer, release or assign any rightsmodify, claims or benefits supplement, deliver a notice of termination under, fail to renew, or waive or accelerate any material rights or defer any liabilities under any Company Contract (excluding any Company Benefit Plan) or any contract (excluding any Company Benefit Plan) that would have been a Company Contract had it been entered into prior to the date of this Agreement, excluding any termination upon expiration of a term in accordance with the terms of such Company Contract;
(xii) cancel, modify other than the settlement of any Proceedings reflected or waive any debts or claims held by reserved against on the balance sheet of the Company (or any of its Subsidiaries or waive any rights held by in the Company or any of its Subsidiaries;
(xiii) waive, release, assignnotes thereto), settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding (A) any audit, claim or other proceeding in respect of Taxes, which shall be governed exclusively by Section 6.1(b)(viii) other than the settlement of such Proceedings that and (AB) involve only any Transaction Litigation, which shall be governed exclusively by Section 6.11) involving solely the payment of monetary damages by the Company or any of its Subsidiaries not of any amount exceeding $100,000 individually or 2,000,000 in the aggregate (but excluding any amounts paid on behalf of aggregate; provided, however, that neither the Company or any of the Company Subsidiaries by any applicable insurance policy maintained by the Company or any of the Company Subsidiaries), (B) do not impose any restrictions or limitations upon the assets, operations, business or conduct of the Company or nor any of its Subsidiaries shall settle or compromise any equitable Proceeding if such settlement or compromise
(1) involves a material conduct remedy or material injunctive remedies on the Company or any of its Subsidiaries and similar relief, (C2) do not involve the involves an admission of any criminal wrongdoing by the Company or any of its Subsidiaries; provided, that Subsidiaries or (3) has a materially restrictive impact on the business of the Company shall be permitted to settle or any Transaction Litigation in accordance with Section 6.10of its Subsidiaries;
(xivxiii) authorize or make or commit to make any capital expenditures other that are in the aggregate greater than one hundred fifteen percent (x115.0%) of the aggregate amount of capital expenditures permitted by scheduled to be made in the Company’s drilling and completion capital expenditure budget for the applicable fiscal quarter as set forth in Schedule 6.1(b)(xiv6.1(b)(xiii) of the Company Disclosure Letter and (yLetter, except to the extent such operations are specifically further described in such Schedule 6.1(b)(xiii) of the Company Disclosure Letter, except, in each case, for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment environment;
(provided A) enter into any lease for real property that would be a Company Real Property Lease if entered into prior to the date hereof or (B) terminate, amend, assign, transfer, modify, supplement, deliver a notice of termination under, fail to renew, or waive or accelerate any rights or defer any liabilities under any Company shall notify Parent of any such expenditure as soon as reasonably practicable)Real Property Lease;
(xv) take any action, cause any action to be taken, knowingly fail to take any action or knowingly fail to cause any action to be taken, which action or failure to act would prevent or impede, or would be reasonably likely to prevent or impede, the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvi) take any action or omit to take any action that is reasonably likely to cause any of the conditions to the Merger set forth in Article VII to not be satisfied;
(xvii) make any loans, advances or capital contributions to, or investments in, any other Person;
(xviii) fail to use commercially reasonable efforts to maintain in full force and effect any in all material Company Insurance Policies (respects, or substantially similar replacements thereto); provided that in the event of a termination, cancellation fail to replace or lapse of any material Company Insurance Policyrenew, the Company shall use commercially reasonable efforts to promptly obtain replacement material insurance policies providing substantially comparable insurance coverage with respect to the material assets, operations and activities of the Company and its Subsidiaries as currently to the extent commercially reasonable in effect as the Company’s business judgment in light of prevailing conditions in the date hereofinsurance market; or
(xixxvi) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
Samples: Merger Agreement (SRC Energy Inc.)
