Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures), or (iv) 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, and shall cause each of its Subsidiaries to, use reasonable best efforts to conduct its businesses in the Ordinary Course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, or (iv) 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 (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise): (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, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements; (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 or lapse of any restrictions on any Company Restricted Stock Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes); (iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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 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 $4,000,000 in the aggregate; (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, other than (A) sales, leases, exchanges or dispositions for which the consideration is less than $500,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 in the aggregate; (vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries; (vii) change in any material respect its financial accounting principles, practices or methods 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, change or revoke any material Tax election or accounting method, but excluding any election that must be made periodically and is made consistent with past practice, (B) file any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability; (ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (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 individual service providers, other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or service provider; (F) establish any Company Benefit Plan that was not in existence prior to the date of this Agreement, or amend or terminate any Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Company; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any labor union, works council or labor organization; (x) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) 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 the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, (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 the Ordinary Course in an amount not to exceed $1,500,000 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 that would be a Company Contract if it were in effect on the date of this Agreement, (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction; (xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliate; (xiii) 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 in each case a value in excess of $500,000 in the aggregate; (xiv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding in respect of Taxes) other than (A) the settlement of such proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10; (xv) make or commit to make any capital expenditures that are, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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); (xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code; (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) 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; (xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or (xx) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 3 contracts
Samples: Merger Agreement (Chesapeake Energy Corp), Merger Agreement (Chesapeake Energy Corp), Merger Agreement (Vine Energy Inc.)
Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures), Law or (iv) otherwise consented to in advance 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, and shall cause each of its Subsidiaries to, use commercially reasonable best efforts to conduct its businesses only in the Ordinary Courseordinary course, including by using commercially reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, to keep available the services of its current officers and employees organization and preserve its existing relationships with Governmental Entities its key customers and suppliers; provided, however, that no action by the Company or its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings Subsidiaries with itrespect 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 other 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 or the Exchange Agreement, (iii) as may be required by applicable Law, Law or (iv) 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 (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 or distributions (1) expressly required by the Organizational Documents of the Company or any of its Subsidiaries in the form made available to Parent prior to the date of this Agreement, (2) paid in cash with respect to the Series B Units to the extent expressly required by the Organizational Documents of Midstream Holdings in the form made available to Parent prior to the date of this Agreement, (3) that are regular quarterly distributions of Rice MLP, consistent with past practice with respect to timing of declaration and distributions payment and including increases to the extent consistent with financial guidance published prior to the date hereof and solely from Operating Surplus (as defined in the Rice MLP LP Agreement) or (4) in the ordinary course of business consistent with past practice, by a direct or indirect wholly-owned Subsidiary of the Company to the Company or another Company, a direct or indirect wholly-owned Subsidiary of the Company or any other equityholder in a direct or indirect Subsidiary of the Company (provided, however, that any such dividends or distributions paid to such other equityholders are no greater on a pro rata basis than those paid to the Company or a direct or indirect Subsidiary of the Company, as the case may be), it being understood that to the extent any subjective determinations by a Subsidiary’s governing body are required for such Subsidiary to make distributions permitted by this clause (4), such subjective determinations shall be made in the ordinary course of business consistent with past practice; (B) split, combine, exchange, subdivide, recapitalize 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 Companyits Subsidiaries, except as expressly required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as or for acquisitions of the date hereof or to satisfy any applicable Tax withholding in respect shares of the vesting or settlement Company Common Stock tendered by holders of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and the applicable award agreementsagreements as in effect on the date of this Agreement to satisfy obligations to pay the exercise price and/or Tax withholding obligations with respect thereto;
(ii) except as set forth on Schedule 6.9 of the Company Disclosure Letter, 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 or MLP Common Units upon the vesting vesting, settlement, exercise or lapse of any restrictions on any Company Restricted Stock Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and the applicable award agreements or phantom unit awards in Rice MLP in accordance with the terms of the applicable award agreements, in each case, as in effect on the date of this Agreement; and (B) issuances by of Company Common Stock in connection with the Redemption or a wholly-owned Subsidiary redemption of Common Units in the Operating Company pursuant to the Operating Company LLC Agreement; and (C) the shares of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly-owned Subsidiary of the Company;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 adopt (or permit to amend be adopted) any change in the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes)Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another wholly owned Subsidiary of the Operating Company or effect any division transaction or Midstream Holdings, (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, exchanging, 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 or (2) acquisitions for which the consideration is less $25,000,000 individually and $100,000,000 in the aggregate or (C) make any loans, advances or capital contributions to, or investments in, any Person (other than the Company or any wholly owned Subsidiaries of the Operating Company or Midstream Holdings) other than (1) loans, advances or capital contributions in the form of trade credit granted to customers in the ordinary course of business or (2) capital contributions to, or investments in, any Person not in excess of $4,000,000 15,000,000 individually or $45,000,000 in the aggregate;
(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue exchange or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue exchange or otherwise dispose of, any (x) Company Retained Midstream (other than uninstalled or out-of-service Company Midstream in an amount not to exceed $25,000,000 in the aggregate) or (y) any material portion of its assets or properties, other than than, in the case of this clause (y), (A) pursuant to an agreement of the Company or any of its Subsidiaries in effect on the date of this Agreement, (B) sales, leases, exchanges leases or dispositions (1) for which the consideration and fair value is less than $500,000 25,000,000 individually and $50,000,000 in the aggregate; aggregate or less and (B2) the sale of Hydrocarbons made in the Ordinary Course; ordinary course of business (C) among which, for avoidance of doubt, shall be deemed to exclude, without limitation, the Company and its wholly owned Subsidiaries sale, exchange or among wholly owned Subsidiaries other disposition of any equity interests in any of the Company; ’s Subsidiaries) or (DC) sales or dispositions of obsolete or worthless equipment hydrocarbons in the Ordinary Course; or (E) asset swaps the fair market value ordinary course of which are less than $500,000 in the aggregatebusiness;
(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, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of the Company or any of its Subsidiaries;
(vii) change in any material respect its their material financial accounting principles, practices or methods 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, change or revoke rescind any material Tax election or accounting method, but excluding relating to Taxes (including any election that must be made periodically and is made consistent with past practicefor 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) file amend any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax ProceedingProceeding relating to Taxes for an amount materially in excess of the amount accrued or reserved with respect thereto on the financial statements of the Company included in the Company SEC Documents, or (HD) surrender change any right to claim a material method of Tax refund, offset or other reduction accounting from those employed in the preparation of its Tax liabilityReturns that have been filed for prior taxable years;
(ix) other than take any action which could reasonably be expected to cause Rice MLP to be treated as required by applicable Law or by the terms of any Company Benefit Plan existing a corporation for U.S. federal income tax purposes;
(x) except as set forth on Schedule 6.9 of the date hereofCompany Disclosure Letter, (A) grant any increases in the compensation (including incentive, severance, change-in-control or retention compensation) or benefits payable payable, provided or to become payable to or provided to, or grant any of its cash- or equity-based awards (including Company Stock Awards or long-term cash awards) to, any current or former directors, officers, employees or other individual service providersproviders of the Company or its Subsidiaries, other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 except as required by the applicable Law or as required by a Company Plan in accordance with its terms of any Company Benefit Plan existing as in effect as of the date hereof; (EB) enter into grant or provide any newchange-in-control, or materially amend any existing, employment or severance or termination agreement with retention payments or benefits to any current or former directordirectors, officerofficers, employee employees or other individual service providerproviders of the Company or any of its Subsidiaries; (FC) establish any Company Benefit Plan that was not in existence prior to the date of this Agreementestablish, or adopt, enter into, amend or terminate any Company Benefit Plan or any other plan, policy, program, agreement or arrangement that would be a Company Plan if in existence effect on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Companyhereof; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (ID) enter into, amend or terminate any collective bargaining agreement or similar agreement; (E) hire, promote or terminate the employment or service (other than for cause) of any employee or other individual service provider of the Company or any of its Subsidiaries with a total annual compensation opportunity in excess of $150,000; or (F) take any labor unionaction to accelerate the vesting or payment, works council or labor organization;fund or in any way secure the payment, of compensation or benefits under any Company Plan.
(xxi) (A) other than in the ordinary course of business consistent with past practice, incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) create any material 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 shall not restrict (A) and (B) shall not restrict the incurrence of Indebtedness (1) under existing credit facilities (other than the Company Rice MLP Credit Facilities and the Notes Agreement) in an amount not to exceed $25,000,000750,000,000, (2) under the Rice MLP Credit Agreement, (3) for extensions, renewals or refinancings of existing Indebtedness (including related premiums and expenses) other than the Company Notes, (4) additional borrowings that are prepayable without premium or penalty at the Closing in an amount not to exceed $25,000,000 in the aggregate or (5) by the Company that is owed to any wholly-owned Subsidiary of the Operating Company or Midstream Holdings or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, (3) incurred Operating Company or assumed in connection with any acquisition permitted by Section 6.1(b)(iv), (4) additional Indebtedness in the Ordinary Course in an amount not to exceed $1,500,000 Midstream Holdings or (5B) the creation of any Encumbrances securing any Indebtedness permitted to be incurred by the foregoing clauses clause (1), (2), (3A) or (4)above;
(xixii) except in the ordinary course of business, (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 material rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any AffiliateContract;
(xiii) 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 in each case a value in excess of $500,000 in the aggregate;
(xiv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromisesettle, any Proceeding (excluding any Proceeding audit, claim or other proceeding in respect of Taxes, which shall be governed exclusively by clause (viii)) other than (A) the settlement of such proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 10,000,000 in the aggregate; provided, however, that neither the Company nor any of its Subsidiaries shall settle or compromise any Proceeding if such settlement or compromise (A) involves a material conduct remedy or material injunctive or similar relief, (B) involves an admission of criminal wrongdoing by the Company or any of its Subsidiaries or (C) has a restrictive impact on the business of the Company or any of its Subsidiaries in any material respect;
(xiv) authorize or make capital expenditures (not including any capital expenditures funded by a non-wholly owned Subsidiary by or as a result of capital contributions from a third Person) that are (A) with respect to the period from the date of this Agreement through December 31, 2017 (the “2017 Period”), in the aggregate and greater than 125% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for the 2017 Period as set forth in Schedule 6.1(b)(xiv) of the Company Disclosure Letter, (B) for the period from January 1, 2018 through June 30, 2018 (the “2018 Period”), in the aggregate greater than 125% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for the 2018 Period as would not result set forth in any restriction on future activity or conduct or a finding or admission Schedule 6.1(b)(xiv) of a violation of Law; provided, that the Company shall be permitted Disclosure Letter, and (C) with respect to settle any Transaction Litigation in accordance with Section 6.10;
the period from the date of this Agreement through June 30, 2018 (xv) make or commit to make any capital expenditures that arethe “Annual Period”), in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter the Annual Period, in each case as set forth in Schedule 6.1(b)(xv6.1(b)(xiv) of the Company Disclosure Letter, except except, in each case, 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 of no more than $1,000,000 made in the aggregate required on an emergency basis response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or for the safety of individualsotherwise;
(xv) fail to use reasonable best efforts to maintain, assets or the environments with financially reputable insurance companies, insurance in which individuals perform work for the Company such amounts and its Subsidiaries (provided that the Company shall notify Parent of any against such emergency expenditure risks and losses as soon as reasonably practicable)is maintained by it at present;
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning consummation of Section 368(a) any of the CodeTransactions;
(xvii) fail to maintain except as provided for in full force and effect in all material respectsSection 3.2(e), or fail to replace or renew, the insurance policies exercise any right of the Company and its Subsidiaries at a level at least comparable to current levels or otherwise in a manner inconsistent with past practiceredeem any Common Units of the Operating Company;
(xviii) take enter into any action agreements, arrangements or omit understandings with Third Party Security Holders relating 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;
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest their securities of the Company and its or the Company’s Subsidiaries) in excess of $250,000, or conduct any substantive discussions with Third Party Security Holder regarding the foregoing; or
(xxxix) agree to take any action that is prohibited by this Section 6.1(b).
(c) The obligations of the Company and its Subsidiaries under Section 6.1 to take an action or not to take an action shall only apply (i) to the extent permitted by the Organizational Documents of Rice MLP and its Subsidiaries or Strike Force Midstream LLC and its Subsidiaries, as applicable, (ii) to the extent the Company is authorized and empowered to bind Rice MLP and its Subsidiaries or Strike Force Midstream LLC and its Subsidiaries, as applicable and (iii) to the extent such action or inaction would not breach any contractual or other duty to Rice MLP or any of its equity holders or Strike Force Midstream LLC or any of its equity holders, as applicable.
Appears in 2 contracts
Samples: Merger Agreement (Rice Energy Operating LLC), Merger Agreement (EQT Corp)
Conduct of Company Business Pending the Merger. (a) Except as (i) as set forth on Schedule in Section 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures), 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 (A) the Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable best efforts to (1) conduct its businesses in all material respects in the Ordinary Course, including by using reasonable best efforts to ordinary course of business and (2) preserve substantially intact its present business organization, goodwill and assets, to keep available the services of its current officers and employees organization and preserve its existing relationships with Governmental Entities its key business relationships and (B) the Company shall maintain its significant customersstatus as a REIT; provided, suppliershowever, licensors, licensees, distributors, lessors and others having significant business dealings that no action by the Company or its Subsidiaries with itrespect 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 other provision of Section 6.1(b).
(b) Except (i) as set forth on the corresponding subsection of Schedule in Section 6.1(b) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement or the Exchange Agreement, (iii) as may be required by applicable Law, or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditionedconditioned (it being understood and agreed that, with respect to Sections 6.1(b)(iv), 6.1(b)(v), 6.1(b)(xi) and 6.1(b)(xv), such consent shall be deemed to have been given unless Parent shall have provided affirmative denial within one (1) Business Day of the Company’s request)), 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 any of its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 Common Stock consistent with past practice at a rate not to exceed $0.035 per share; (2) dividends or other distributions to the Company by any directly or another direct or indirect wholly-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 its Subsidiaries (as applicable) to maintain its status as a REIT under the Code and avoid the imposition of corporate level income Tax under Section 857 of the Code or excise Tax under Section 4981 of the Code (including the Minimum Distribution Dividend); or (4) any dividend to the extent declared and paid in accordance with Section 6.17; (B) split, combine, exchange, subdivide, recapitalize 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 CompanyCompany that is not wholly-owned, except as required by the Organizational Documents of the Company or any Subsidiary of the Company, any Company Plan, any Company Warrant or the terms of any other capital stock or equity interest of a Subsidiary the Company or any Subsidiary, in each case, existing and disclosed to Parent as of the date hereof (or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of granted following the date hereof, of this Agreement in accordance with the terms of the Company Stock Plan and applicable award agreementsthis 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 intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the issuance or delivery of Company Common Stock upon the vesting or lapse of any restrictions on any Company Restricted Stock Unit Awards Equity Award granted under the Company Equity Plan and outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreementshereof; and (B) issuances by a wholly-owned the issuance of Company Common Stock upon exercise of any Company Warrants outstanding on the date hereof; (C) shares of Company Common 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 (D) issuances of Company Common Stock at a net price per share (after giving effect to underwriter discounts and offering and sale expenses) not less than the Company’s tangible book value per share as reported in the Company’s most recent annual report on Form 10-K or quarterly report on Form 10-Q as of the date of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly-owned Subsidiary of the Companyissuance;
(iii) amend or propose to (A) amend the Company’s Organizational Documents or amend or propose to 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 (other than ministerial changes)C) waive for any Person, or exempt any Person from, or establish or increase any “excepted holder limit” for any Person with respect to, any of the restrictions on transfer and ownership of shares of stock of the Company set forth in the Company’s Organizational Documents;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction other than another wholly owned Subsidiary 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 or any business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) transactions between the Company and a wholly owned Subsidiary of the Company or between or among wholly owned Subsidiaries of the Company, and (2) after consultation with Parent, acquisitions for which the consideration is less than constitutes fair market value therefor and does not exceed $4,000,000 10,000,000 individually or $20,000,000 in the aggregate;
(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, any material portion of its assets or propertiesassets, other than sales, leases or dispositions of assets that (A) sales, leases, exchanges are pursuant to an agreement of the Company or dispositions for which any of its Subsidiaries in effect on the consideration is less than $500,000 in the aggregate; date of this Agreement or (B) the sale after consultation with Parent, do not involve consideration in excess of Hydrocarbons $10,000,000 individually or $25,000,000 in the Ordinary Course; aggregate and will result in net proceeds to the Company that are not less than, in the case of any loan, the unpaid principal balance thereof, less any Accounting Standards Update (CASU) 2016-13 reserves therefor, in each case as of December 31, 2022, and in the case of any Company Owned Property, the carrying value thereof as of December 31, 2022;
(vi) adopt a plan of complete or partial liquidation or dissolution of the Company or any of its Subsidiaries, other than such transactions among the Company and its any wholly owned Subsidiaries Subsidiary of the Company or between or among wholly owned Subsidiaries of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 in the aggregate;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;
(vii) change in any material respect its financial material accounting principles, practices or methods in a manner 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, change or revoke any material Tax election or accounting method, but excluding any election that must be made periodically and is made consistent with past practicein the ordinary course of business, (B) file any material amended Tax Return, if required by Law or (C) except if and to the extent otherwise required by 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 Lawprovisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt or change any material method of Tax accounting, file any material amended Tax Return 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 than on Proceeding relating to a basis consistent material amount of Taxes, enter into any closing or similar agreement with past practiceany Taxing Authority, (D) consent surrender any right to claim a material refund of Taxes, or agree to any extension or waiver of the limitation period applicable to any material claim or assessment in respect statute of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement limitations with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liabilityamount of Taxes;
(ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (A) establish any new material Company Plan or materially amend any material Company Plan in existence on the date of this Agreement if such amendment would have the effect of materially enhancing or materially increasing any benefits thereunder; or (B) grant any increases material increase in the compensation or benefits payable or to become payable to any of its current or former directors, officers, employees or other individual service providers, other than salary or wage in connection with annual merit-based compensation increases made in the ordinary course of business business; provided, however, that no action will be a violation of this Section 6.1(b)(ix) if it is (1) taken pursuant to Section 3.3 or as permitted under Section 6.1(b)(ii), (2) taken in order to comply with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (B) take any action to accelerate the vesting or lapsing of restrictions or paymentapplicable Law, or fund or in any other way secure the payment(3) required by, of compensation or benefits; (C) grant any new equity-based or equity-linked awardsand taken pursuant to, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 a Company Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or service provider; (F) establish any Company Benefit Plan that was not in existence prior to the date of this Agreement, or amend or terminate any Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Company; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any labor union, works council or labor organization;
(x) make any loans, advances or capital contributions to, or investments in, any other Person in excess of $5,000,000, except for (A) incurafter consultation with Parent, create or assume any Indebtedness or guarantee any such Indebtedness loans made in the ordinary course of another Person or business consistent with the Company’s underwriting criteria in effect as of the date hereof, (B) create funding of commitments in the ordinary course of business and accordance with the terms of any Encumbrances on any property or assets agreements in effect as of the Company date hereof, or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing clauses (AC) and (B) shall not restrict the incurrence of Indebtedness (1) under loans among the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, (2) by the Company that is owed to any wholly-its wholly owned Subsidiary of the Company Subsidiaries or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of among the Company, (3) incurred or assumed in connection with any acquisition permitted by Section 6.1(b)(iv), (4) additional Indebtedness in the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4)’s wholly owned Subsidiaries;
(xi) modify or amend in any material respect, or waive any material rights under, any Company Loan with a value in excess of $5,000,000, it being acknowledged and agreed that (A) an extension of maturity of less than six (6) months will not be deemed to be material and (B)(1) a change in the lien priority with respect to the collateral, (2) a decrease in the rate of a Company Loan, (3) a removal of a personal guarantee from a Company Loan, (4) a release of a Company Loan’s collateral, (5) a foreclosure or (6) a release or waiver of any material fees (other than default interest) associated with a Company Loan will each be deemed to be material for purposes of this clause (xi);
(xii) enter into any contract that would be a Company Contract if it were Contract, except in effect on the date ordinary course of this Agreementbusiness and as would not prevent or materially delay the consummation of the Transactions, (B) or modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including or any contract that, if existing as of the date hereof, would be a Company Contract) in any material respect, except in the ordinary course of business and which would not reasonably be expected to prevent or materially delay the consummation of the Transactions, except for (A) entry into any agreements in connection with the making of loans as and to the extent permitted by Section 6.1(b)(x); and (B) any termination or renewal in accordance with the terms of an any existing Company Contract on substantially the same terms in the Ordinary Course), that occurs automatically without any action (other than in each case, with respect to Sections 4.20(a)(xiiinotice of renewal) and 4.20(a)(xiv) only, in by Company or any Subsidiary of the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any AffiliateCompany;
(xiii) cancelsettle, modify or waive offer or propose to settle, any debts or claims held by Proceeding against the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries having in each case a value in excess of $500,000 in the aggregate;
(xiv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding in respect of Taxes) other than (A) the Transaction Litigation, settlement of such proceedings involving only which shall be governed by Section 6.10) that would result in the payment of monetary damages or other transfer of value by the Company or any of its Subsidiaries of any amount not exceeding $500,000 individually or $2,000,000 in the aggregate and aggregate, or that would include any admission of wrongdoing by the Company or any of its Subsidiaries;
(xiv) take any action, or knowingly 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 to cease to be treated as any of (A) a partnership or disregarded entity for U.S. federal income tax purposes or (B) as would not result in any restriction on future activity or conduct a Qualified REIT Subsidiary or a finding or admission Taxable REIT Subsidiary under the applicable provisions of a violation Section 856 of Law; providedthe Code, that as the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10case may be;
(xv) other than in the ordinary course of business, make or commit agree to make any new capital expenditure or expenditures that arethat, individually, is in excess of $1,000,000 or, in the aggregate greater than 110% aggregate, are in excess of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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)2,000,000;
(xvi) take incur, create, assume, refinance, replace or prepay in any actionmaterial respects the terms of any Indebtedness or any derivative financial instruments or arrangements, cause or issue or sell any action debt securities or calls, options, warrants or other rights to be takenacquire any debt securities (directly, knowingly fail to take contingently or otherwise); provided, however, that the foregoing shall not restrict (A) Indebtedness incurred in the ordinary course of business under the Company’s existing revolving credit facility, (B) the incurrence of any action Indebtedness among the Company and its wholly owned Subsidiaries or knowingly fail to cause among the Company’s wholly owned Subsidiaries, (C) guarantees by the Company of Indebtedness of its Subsidiaries or guarantees by the Subsidiaries of the Company of Indebtedness of the Company or any action to be takenother Subsidiaries of the Company, which action or failure to act would prevent or impedeIndebtedness is incurred in compliance with the immediately preceding clause (B), or would be reasonably likely to prevent (D) any derivative financial instruments or impede, arrangements entered into or incurred by the Integrated Mergers, taken together, from qualifying as a reorganization within Company or any of its Subsidiaries for the meaning purpose of Section 368(a) of the Codefixing or hedging interest rate and not for speculative purposes;
(xvii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the insurance policies enter into any new line of the Company and its Subsidiaries at a level at least comparable to current levels or otherwise in a manner inconsistent with past practicebusiness;
(xviii) take any action action, or omit fail to take any action, which action that is or failure would reasonably likely be expected to cause the Company or any of the conditions Subsidiaries of the Company to be required to be registered as an investment company under the Merger set forth in Article VII to not be satisfiedInvestment Company Act;
(xix) elect not to participate other than with respect to any proposed operation regarding any Subsidiaries of the Oil and Gas Properties that involves capital expenditures Company, enter into any material transactions or contracts with any Affiliates (net to the interest other than directors or officers in their capacities as such) of the Company and its Subsidiaries) in excess of $250,000Company; or
(xx) agree or enter into any arrangement or understanding to take any action that is prohibited by this Section 6.1(b).
(c) The Company shall (i) manage the Company Loans and the Company Owned Properties in all material respects in the ordinary course of business; and (ii) upon request from time to time (but not more often than once every two (2) weeks) prior to the Closing, participate in a call with Parent to discuss the status of the Company Loans and the Company Owned Properties and planned loan and property management activities, including (x) any planned dispositions of any Company Loans or Company Owned Properties, (y) any proposed material modification or amendment to, or waiver of any material rights under, any Company Loan, and (z) any plan to initiate any foreclosure, enforcement, recovery or similar Proceedings relating to any Company Loans.
(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 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.
Appears in 2 contracts
Samples: Agreement and Plan of Merger (Broadmark Realty Capital Inc.), Merger Agreement (Ready Capital Corp)
Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, Law (including any COVID-19 Measures), or (iv) as expressly required by the Prepackaged Plan if the Company Chapter 11 Cases have been commenced, or (v) 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, and shall cause each of its Subsidiaries 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, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it; provided, however, that no action or inaction by the Company 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 other 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 or the Exchange Agreement(including Section 6.4), (iii) as may be required by applicable LawLaw or any Governmental Entity, (iv) as expressly required by the Prepackaged 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 the Company shall not, and shall not permit its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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-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, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements;
(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 or lapse of any restrictions on any Company Restricted Stock Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 (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 of the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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, in each case other than acquisitions for which the consideration is less than $4,000,000 of inventory, equipment or other similar assets in the aggregateordinary 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, other than (A) pursuant to a Company Contract in effect on the date of this Agreement, sales, leases, exchanges or dispositions for which the consideration is less than $500,000 100,000 individually or $1,000,000 in the aggregate; , (B) the sale of Hydrocarbons in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; , (DC) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; ordinary course of business consistent with past practice, (D) the sale of Hydrocarbons in the ordinary course of business, or (E) asset swaps the fair market value of assets or property, which are less than may include cash consideration, of up to $500,000 175,000 in the aggregateaggregate for all such swap transactions;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly owned Subsidiaries of the Company;
(vii) change in any material respect its financial accounting principles, practices or methods 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, change or revoke any material Tax election or accounting methodelection, but excluding any election that must be made periodically and is made consistent with past practice, (B) change an annual Tax accounting period, adopt or change any material Tax accounting method, file any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar closing agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax ProceedingProceeding regarding any Taxes, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability;
(ix) other than 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 could prevent or impede, or could reasonably be expected to prevent or impede, the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(x) except as required by applicable Law or by the terms of any pursuant to an existing Company Benefit Plan existing as of the date hereofPlan, (A) grant or commit to grant any new increases in the compensation compensation, bonus, severance, termination pay or other benefits payable or to 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 individual service providersterms are comparable to those of the employee that he or she is replacing), other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 Benefit Plan, (C) grant or commit to grant any new equity-based or equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, offer letter or employment or severance or termination agreement with any current or former director, officerofficer or employee at or above the level of vice president, employee (E) pay or service provider; commit to pay any bonuses, other than the payment of annual or other short-term cash bonuses for completed performance periods, (F) establish establish, enter into or adopt any material Company Benefit Plan that which was not in existence prior to 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 Plan, in existence on each case, except for changes to the date contractual terms of this Agreement, other than de minimis administrative amendments health and welfare plans made in the ordinary course of business that do not have the effect of enhancing any benefits thereunder or otherwise resulting result in increased costs a material increase in cost to the Company; , or (G) hire or promote any employee or engage any other service provider terminate (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or ) any employee, except as is reasonably necessary to replace any employee;
(Ixi) enter into, amend or terminate any collective bargaining agreement with recognize any labor union, works council council, or other labor organizationorganization as the bargaining representative of any employees;
(xxii) (A) retire, repay, defease, repurchase or redeem all or any portion of the Company Amended Credit Facility or Company Senior Notes, (B) incur, create create, assume, waive or assume release any Indebtedness or guarantee any such Indebtedness of another Person or (BC) create 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 (AB) and (BC) shall not restrict the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, existing credit facilities or (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 the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses clause (1), (2), (3) or (4);
(xixiii) (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) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract Contracts on substantially the same terms in the Ordinary Courseordinary course of business consistent with past practice), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xivContracts of the type described in Section 4.19(a)(viii) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance ordinary course of business consistent with the Company Credit Facilities, enter into any material Derivative Transactionpast practice;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliate;
(xiiixiv) 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 in each case a value in excess of $500,000 200,000 individually or $1,000,000 in the aggregate;
(xivxv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding Proceedings (excluding any Proceeding in respect of Taxes) other 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 settlement of such proceedings involving only Merger or the payment of monetary damages by the Company Transactions, or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate and (B) as would not result in the imposition of any restriction on 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; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xvxvi) make or commit to make any capital expenditures that areexpenditures, in the aggregate greater than 110% of the aggregate amount of except for capital expenditures scheduled made pursuant to be made and in accordance with the Company’s capital expenditure budget for such fiscal quarter the period indicated as set forth in Schedule 6.1(b)(xv6.1(b)(xvi) of the Company Disclosure Letter, except for Letter or capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 250,000 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);
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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, XXXXX 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;
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or
(xxxxi) agree to commit to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (HighPoint Resources Corp), Transaction Support Agreement (Bonanza Creek Energy, Inc.)
Conduct of Company Business Pending the Merger. (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 or (including pursuant to the Exchange AgreementTRA Waiver and, (iii) for the avoidance of doubt, the Exchanges and the Conversion), as may be required by applicable Law, (including any COVID-19 Measures), or (iv) otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), during the Company covenants and agrees that, period from the execution of this Agreement until the earlier to occur of the Effective Time Closing and the termination of this Agreement pursuant to in accordance with Article VIIIVIII (the “Interim Period”), the Company covenants and agrees that it shall, and shall cause each of its Subsidiaries to, use commercially reasonable best efforts to conduct its businesses in the Ordinary Courseordinary course; provided, including however, that no action or inaction by using reasonable best efforts the Company or its Subsidiaries with respect to preserve substantially intact its present business organization, goodwill and assets, to keep available the services matters specifically addressed by any provision of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with itSection 6.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other 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 or (including pursuant to the Exchange AgreementTRA Waiver and, (iii) for the avoidance of doubt, the Exchanges and the Conversion), as may be required by applicable Law, or (iv) otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until during the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII Interim Period, the Company shall not, and shall not permit its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 (x) dividends and distributions by a direct or indirect wholly-owned Subsidiary of the Company Holdco to the Company Holdco or another direct or indirect wholly-owned Subsidiary of Company Holdco, (y) dividends, distributions or other payments from Company Holdco to the CompanyCompany or (z) tax distributions in accordance with the Company Holdco LLC Agreement; (B) split, combine, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary or as contemplated by any Company Plan in each case existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreementsthis 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 issuance of Company Common Stock upon the vesting or lapse of any restrictions on any shares related to Company Restricted Stock Unit Awards RSUs or other awards granted under the Company Equity Plans and outstanding on the date hereof or issued in compliance with clause (B) below; (B) the issuance of equity awards granted under the Company Equity Plans in accordance with Schedule 6.1(b)(ii); (C) the issuance of Company Common Stock pursuant to the Company ATM Agreement in accordance with Schedule 6.1(b)(ii); (D) the issuance of Company Common Stock upon the exercise of any Company Options; (E) the issuance of Company Common Stock upon the conversion of any Company Preferred Stock; (F) the issuance of Company Common Stock upon the exercise of any Company Warrants in accordance with the terms of the Company Stock Plan and applicable award agreementswarrant agreement; and (BG) issuances by a wholly-owned Subsidiary of the Company or Company Holdco of such Subsidiary’s capital stock or other equity interests to the Company or Company Holdco or any other wholly-owned Subsidiary of the CompanyCompany or Company Holdco; and (H) issuances of any Company Common Stock in connection with a redemption of Company Holdco Units in accordance with the Company Holdco LLC Agreement;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes)or form any new Subsidiary of the Company;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than between wholly-owned Subsidiaries of the Company or effect any division transaction Company Holdco 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 business or any corporation, partnership, association or other business organization or division thereof, in each case other than (x) 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, (y) acquisitions of supplies or materials (other than Bitcoin miners) in the ordinary course of business consistent with past practices or (z) acquisition of Intellectual Property rights pursuant to non-exclusive licenses in the ordinary course of business consistent with past practices;
(v) sell, lease or otherwise dispose of (including by virtue of failure to exercise any lease renewal options), or agree to sell, lease or otherwise dispose of, any assets or properties (x) that are neither Bitcoin miners nor electrical equipment of any substation, transformer, data center or other infrastructure between any substation and data center and (y) for which the consideration is less than $1,000,000 individually or $4,000,000 in the aggregate;
(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, ; other than (A) salespursuant 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)(v) of the Company Disclosure Letter, leases, exchanges or dispositions for which the consideration is less than $500,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; (C) sales, leases or other dispositions among the Company and its wholly owned Subsidiaries (or Company Holdco and its wholly owned Subsidiaries) or among wholly owned Subsidiaries of the Company; Company (Dor Company Holdco), or (C) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value ordinary course of which are less than $500,000 in the aggregatebusiness consistent with past practice;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to acquire any material real property;
(vii) adopt a plan of complete or partial liquidationliquidation or dissolution or effect a reorganization, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly-owned Subsidiaries of the Company or Company Holdco;
(viiviii) change in any material respect its financial their material accounting principles, practices or methods 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;
(viiiix) except in the ordinary course of business: (A) make, change or revoke any material Tax election election, (B) change an annual Tax accounting period, (C) adopt or change any material Tax accounting method, but excluding any election that must be made periodically and is made consistent with past practice, (BD) file any material amended Tax Return, (CE) except to the extent otherwise required by applicable Lawenter into any material closing agreement with a Taxing Authority, file (F) settle or compromise any material Tax Return other than on a basis consistent with past practice, liability of the Company or any of its Subsidiaries; or (DG) consent to any extension or waiver of the statute of limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into Taxes of the Company or any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liabilityof its Subsidiaries;
(ixx) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (A) subject to the restrictions under Section 6.1(b)(ii), grant any increases in equity or equity-based awards or increase the compensation or benefits payable or to become payable provided to any of its current or former directors, officers, employees or other individual service providersproviders with annual compensation in excess of $150,000, other than salary except as required by applicable Law, pursuant to a Company Plan existing as of the date hereof, or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate)as permitted by this Agreement; (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 equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (D) pay or agree to pay any current or former director, officer, employee or other individual service provider, any pension, retirement allowance or other employee benefit not required by the terms of any Company Plan or applicable Law existing as of the date hereof; (C) grant or provide any change in control, severance, termination, retention or similar payments or benefits to any current or former director, officer, employee or other individual service provider any pensionprovider, retirement allowance or other benefit not in each case except as required by the terms of any applicable Law, pursuant to a Company Benefit Plan existing as of the date hereof, or as permitted by this Agreement; (D) establish, adopt, enter into, terminate or amend any new or any existing Company Plan or any plan, agreement, program, policy or other arrangement that would be a Company Plan if it were in existence as of the date hereof, other than (x) in connection with routine, immaterial or ministerial amendments to health and welfare plans that do not materially increase benefits or result in a material increase in administrative costs and (y) offer letter agreements for employees hired following the date of this Agreement where such agreements do not provide for severance or termination benefits except as required by applicable Law; or (E) enter into amend or modify any newperformance criteria, metrics or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or service provider; (F) establish targets under any Company Benefit Plan that was not such that, as compared to those criteria, metrics or targets under any Company Plan in existence prior to effect as of the date of this Agreement, the performance criteria, metrics or amend targets would reasonably be expected to be more likely to be achieved than in the absence of such amendment or terminate modification;
(xi) (A) modify, renew, extend, or enter into any labor union agreement, collective bargaining agreement or any other labor-related agreements or arrangements with any labor union, labor organization or works council, or (B) voluntarily recognize or certify any labor union, labor organization, works council, or other representative of a group of employees of the Company Benefit Plan in existence on or its Subsidiaries as the date collective bargaining representative for any employees of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder Company or otherwise resulting in increased costs to the Company; its Subsidiaries;
(Gxii) (A) hire or promote engage, or make an offer to hire or engage, any individual as, or terminate the employment or services of, an officer, employee, or other individual service provider of the Company or any of its Subsidiaries with an annual base salary or fees in excess of $150,000 (other than hiring “at-will” employees or service providers without severance or hiring or engaging, or making an offer to hire or engage, any individual to replace an officer, employee or engage individual service providers who has resigned or had his or her employment or engagement terminated on the same or substantially similar terms and conditions of employment or engagement, as applicable, as similarly-situated individuals of the Company and its Subsidiaries or the person being replaced, including base compensation or fee arrangement and bonus opportunity, if applicable); or (B) other than for cause (consistent with past practice), terminate the employment or engagement of any other current officer, employee or individual service provider (who is a natural person) who is (of the Company or would be) any of its Subsidiaries with an executive officer or who has (or would have) an annualized annual base salary or fees in excess of $150,000; ;
(Hxiii) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officerwaive, in each case, other than for cause; or (I) enter intorelease, amend or terminate fail to enforce the restrictive covenant obligations of any collective bargaining agreement with any labor unioncurrent or former employee, works council independent contractor, officer or labor organizationdirector of the Company or its Subsidiaries;
(xxiv) (A) other than in the ordinary course of business consistent with past practice, incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) create any material Encumbrances on any material 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 the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, (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 the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4);
(xixv) (A) enter into any contract that would be a Company Contract if it were in effect on the date of this Agreement, except in the ordinary course of business consistent with past practice and as would not prevent or materially delay the consummation of the Transactions, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) onlyContract, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable a manner that is materially adverse to the Company and its Subsidiaries than those generally being provided to Subsidiaries, taken as a whole, or available from unrelated third parties, and in each case involving aggregate payments which could prevent or materially delay the consummation of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliatethe Transactions;
(xiiixvi) 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 in each case a value in excess of $500,000 in the aggregate;
(xiv) 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 (A) the settlement of such proceedings Proceedings involving only the payment of monetary damages (to the extent not covered by insurance) by the Company or any of its Subsidiaries of any amount not exceeding $500,000 individually or $1,000,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or involving no admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10wrongdoing or injunctive or other equitable relief;
(xvxvii) make or commit to make any capital expenditures that are, or incur any obligations or liabilities in the aggregate greater than 110% respect thereof during any fiscal quarter in excess of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in on Schedule 6.1(b)(xv6.1(b)(xvii) of the Company Disclosure Letter, except for capital expenditures Letter with respect to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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);
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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 practicefiscal quarter;
(xviii) take engage in any action transaction with, or omit to take enter into any action that is reasonably likely to cause agreement, arrangement or understanding with, any Affiliate of the conditions Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to the Merger set forth in Article VII be disclosed pursuant to not be satisfiedItem 404;
(xix) elect not to participate amend, modify, terminate, or enter into any agreement with respect to any proposed operation regarding any to, the Tax Receivable Agreement (for the avoidance of doubt, other than as contemplated by the Oil and Gas Properties that involves capital expenditures TRA Waiver) or the TRA Waiver (net to for the interest avoidance of the Company and its Subsidiaries) in excess of $250,000doubt, other than as contemplated thereby); or
(xx) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (Q Power LLC), Merger Agreement (Bitfarms LTD)
Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures), Law or (iv) 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, and shall cause each of its Subsidiaries to, use reasonable best efforts to conduct its businesses in the Ordinary Course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it.
(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 or the Exchange Agreement, (iii) as may be required by applicable Law, or (iv) 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, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to (1) conduct its businesses (I) in the ordinary course of business in all material respects and (II) in compliance in all material respects with applicable Laws and (2) preserve substantially intact its present business organization and preserve its existing relationships with its key business relationships, vendors, counterparties and employees; provided, however, that no action by the Company 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 other provision of Section 6.1(b).
(b) Except (v) as set forth in Section 6.1(b) of the Company Disclosure Letter, (w) as permitted or required by this Agreement (including as contemplated by the Original Agreement, any amendment to the Original Agreement or Section 6.10 of 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 (z) 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 (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock Company Plan or equity interest of a Subsidiary any Company Warrant, in each case, existing and disclosed to Parent as of the date hereof (or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of granted following the date hereof, of this Agreement in accordance with the terms of the Company Stock Plan and applicable award agreementsthis 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 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 exercise or lapse exchange of any restrictions on any Company Restricted Stock Unit Awards Warrants or Company Convertible Notes outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 Companyhereof;
(iii) (A) amend or propose to amend the Company’s Organizational Documents or (B) amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes)Subsidiaries;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than another entity in which the Company or effect any division transaction its Subsidiaries own an interest, whether direct or indirect, 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 or any business or any corporation, partnership, association or other business organization or division thereof, in each case other than acquisitions for which transactions between the consideration is less than $4,000,000 in Company and a Subsidiary of the aggregateCompany or between or among Subsidiaries of the Company;
(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, any material portion of its assets or properties, other than (A) sales, leases, exchanges or dispositions for which the consideration is less than $500,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 in the aggregateassets;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of the Company or any of its Subsidiaries;
(vii) change in any material respect its financial accounting principles, practices or methods in a manner that would materially affect the consolidated assets, liabilities or results of operations of the Company and or any of its Subsidiaries, except as required by GAAP or applicable Law;
(viii) (A) makemake or change any Tax election, adopt or change any Tax accounting period or revoke any material method of Tax election or accounting methodaccounting, but excluding any election that must be made periodically and is made consistent with past practice, (B) file any material amended Tax Return, (C) except settle or compromise any liability for Taxes or any Tax audit or other proceeding relating to the extent otherwise required by applicable LawTaxes, file enter into any closing or similar agreement with any Taxing Authority, surrender any right to claim a material Tax Return other than on a basis consistent with past practice, (D) consent refund of Taxes or agree to any extension or waiver of the limitation period applicable to any material claim or assessment in respect statute of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liabilitylimitations;
(ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (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 individual service providers, other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 establish any new equity-based or equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Employee Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or service provider; (F) establish any Company Benefit Plan that which was not in existence prior to the date of this Agreement, or amend or terminate any Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not Agreement if such amendment would have the effect of enhancing or materially increasing any benefits thereunder or otherwise resulting in increased costs to the Companythereunder; (GD) accelerate the vesting, payment or settlement of any compensation or benefit; or (E) hire any new employees other than to fill existing vacancies or promote any employee as necessary to maintain the ordinary course of business, or engage any other service provider (who is a natural person) who is (transfer or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment service of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than any such termination for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any labor union, works council or labor organization;
(x) (A) incurestablish or become obligated under any collective bargaining agreement, create memorandum of understanding, or assume any Indebtedness other contract with a labor union, labor organization, works council or guarantee any such Indebtedness similar representative of another Person or (B) 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 the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, (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 the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4)employees;
(xi) make any loans, advances or capital contributions to any other Person in excess of $50,000 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 if it were in effect on the date of this Agreement, or (B) modify, amend, terminate or assign, or waive or assign any material rights under, any Company Contract (including 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 an any existing Company Contract on substantially that occurs automatically without any action (other than notice of renewal or extension) by Company or any Subsidiary of the same terms Company; or (2) any trade agreements entered into, modified, amended, terminated or assigned in the Ordinary Course)ordinary course of business provided that, other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) only, no such action will result in a Company Material Adverse Effect or otherwise impede the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative TransactionTransactions;
(xiixiii) other than agreements, arrangements the settlement of any Proceeding (A) reflected or reserved against on the balance sheet of the Company Contracts made (or in the Ordinary Coursenotes thereto), on terms no less favorable (B) that would not reasonably be expected to restrict the operations of the Company and its Subsidiaries than those generally being provided after the Effective Time or (C) in connection with any 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 available from unrelated third partiesoffer or propose to settle, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any Proceeding against the Company or any of its Subsidiaries to(excluding any audit, enter into any agreement, arrangement, Company Contract claim or other transaction with any Affiliate;
(xiiiproceeding in respect of Taxes) cancel, modify involving a payment or waive any debts or claims held other transfer of value by the Company or any of its Subsidiaries exceeding $50,000 individually, or waive any rights held by the Company or any of its Subsidiaries having in each case a value in excess of $500,000 100,000 in the aggregate;
(xiv) waivemake or agree to make any new capital expenditure or expenditures that, releaseindividually, assignis in excess of $50,000 or, settle or compromise or offer or propose to waivein the aggregate, release, assign, settle or compromise, any Proceeding are in excess of $100,000;
(excluding any Proceeding in respect of Taxesxv) 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 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 (Adirectly, 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) the settlement enter into any new line of such proceedings involving only the payment of monetary damages by business;
(xvii) take any action, or fail to take any action, which action or failure would reasonably be expected to cause the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xv) make or commit to make any capital expenditures that are, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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);
(xvi) 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, registered as an investment company under the Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the insurance policies of the Investment Company and its Subsidiaries at a level at least comparable to current levels or otherwise in a manner inconsistent with past practiceAct;
(xviii) take enter into any action transactions or omit to take contracts with any action that is reasonably likely to cause any Affiliates (other than directors or officers in their capacities as such) of the conditions to the Merger set forth in Article VII to not be satisfied;Company; or
(xix) elect not to participate with respect to authorize, agree or enter into any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or
(xx) agree 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. Further, notwithstanding anything to the contrary in this Agreement prior to or following the execution hereof, in the event the Company has a termination right pursuant to Section 8.1(f), without affecting such termination right or requiring the Company to exercise the same, Parent and Merger Sub hereby consent to the Company discussing, negotiating and executing a letter of intent, memorandum of understanding or other binding or non-binding agreement with investors with respect to a potential equity, debt or other investment in the Company.
Appears in 2 contracts
Samples: Agreement and Plan of Merger (Aditxt, Inc.), Agreement and Plan of Merger (Evofem Biosciences, Inc.)
Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, (including iv) for any actions required to comply with COVID-19 Measures or otherwise taken (or not taken) by the Company or any of its Subsidiaries reasonably and in good faith to respond to COVID-19 or the COVID-19 Measures; provided that prior to taking any actions in reliance on this clause (iv), which would otherwise be prohibited by any provision of this Agreement, the Company will use commercially reasonable efforts to provide advance notice to and consult with Parent (if reasonably practicable) with respect thereto or (ivv) 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, and shall cause each of its Subsidiaries to, use reasonable best efforts to conduct its businesses in the Ordinary Course, including by using reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it.
(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 or the Exchange Agreement, (iii) as may be required by applicable Law, or (iv) 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 (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 (x) regular quarterly cash dividends (or corresponding dividend equivalents in respect of equity awards) payable by the Company in the Ordinary Course (and, for avoidance of doubt, excluding any special dividends) in an amount not to exceed $0.20 per share of Company Common Stock and (y) 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, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Awards or Company Performance Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements;
(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 or lapse of any restrictions on any Company Restricted Stock Awards or Company Performance Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 (C) shares of capital stock issued as a dividend made in accordance with Section 6.1(b)(i);
(iii) (A) amend or propose to amend the Company’s Organizational Documents (other than the amendment of the Company’s Bylaws contemplated by Section 4.3(a)) or (B) amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than than, in the case of the Company’s Subsidiaries, ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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 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 $4,000,000 50,000,000 individually or in the aggregate;
(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, ; other than (A) sales, leases, exchanges leases or dispositions for which the consideration is less than $500,000 50,000,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; or (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 50,000,000 in the aggregate; 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, liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly-owned Subsidiaries of the Company;
(vii) change in any material respect its financial their material accounting principles, practices or methods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiariesmethods, except as required by GAAP or applicable Law;
(viii) make (A) makeother than in the Ordinary Course), change or revoke any material election relating to Taxes, change an annual Tax election accounting period, adopt (other than in the Ordinary Course) or change any Tax accounting method, but excluding any election that must be made periodically and is made consistent with past practice, (B) file any material amended Tax Return, Return (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on as required pursuant to a basis consistent with past practice, (D“determination” within the meaning of Section 1313(a) consent to any extension or waiver of the limitation period applicable to Code (or any material claim analogous provision of state, local or assessment in respect of material Taxesforeign Law)), (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceedingclaim, audit, assessment or (H) dispute, surrender any right to claim a material Tax refund, offset agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax (other reduction than in the Ordinary Course), or take any action which is reasonably likely to result in a material increase in the Tax liabilityliability of the Company or its Subsidiaries (other than (A) in the Ordinary Course or (B) 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));
(ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (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 individual service providers, other than salary except as required by applicable Law or wage increases made in as required by the ordinary course terms of business with respect to non-officer level employees and service providers (not to exceed 2% in a Company Plan existing as of the aggregate)date hereof; (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 equitynon-linked equity awards, amend or modify the terms of any outstanding equity-based or equitynon-linked 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 3.33.2; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or other service provider; (F) establish any Company Benefit Plan that which was not in existence prior to the date of this Agreement, or amend or terminate any Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Company; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized target compensation opportunity (including base salary compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $150,000250,000; (H) terminate the employment of any employee or other service provider who has an annualized target compensation opportunity (including base salary compensation, target annual bonus opportunity and target long-term incentive opportunity) in excess of $150,000 250,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any or other labor union, works council or labor organizationagreement;
(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 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), other than any such amounts under the Existing Credit Facility; (B) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person Person; or (BC) 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 (AB) and (BC) shall not restrict the incurrence of Indebtedness (1) under existing credit facilities in the Company Credit Facilities Ordinary Course, and in no event exceeding $500,000,000 of borrowings in the Notes in an amount not to exceed $25,000,000aggregate, (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 the Ordinary Course in an amount not to exceed $1,500,000 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 that would be a Company Contract if it were in effect on the date of this Agreement, (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii4.19(a)(x) and 4.20(a)(xiv(xi) only, in the Ordinary Course or, or (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative TransactionTransaction without notifying Parent within a reasonably practicable amount of time thereafter;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliate;
(xiii) 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 in each case a value in excess of $500,000 5,000,000 in the aggregate;
(xivxiii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding audit, claim or other proceeding in respect of Taxes) other than (A) the settlement of such proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 10,000,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.106.11;
(xvxiv) make or commit to make any capital expenditures that are, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made $500,000,000 in the Company’s capital expenditure budget for such any fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letterquarter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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)environment;
(xvixv) 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 Integrated Mergers, taken together, Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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;
(xviiixvi) 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;
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or
(xxxvii) agree to take any action that is prohibited by this Section 6.1(b).
Appears in 2 contracts
Samples: Merger Agreement (Concho Resources Inc), Merger Agreement (Conocophillips)
Conduct of Company Business Pending the Merger. (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 or (including in connection with the Exchange AgreementConversions), (iii) as may be required by applicable Law, Law (including any COVID-19 Measures), or (iv) otherwise consented to by Parent Isla in writing (which such consent shall not to be unreasonably withheld, delayed conditioned or conditioneddelayed), the Company covenants and agrees that, until the earlier of the Merger Effective Time and the termination of this Agreement pursuant to Article VIII, it shall, and shall cause each of its Subsidiaries to, use commercially 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 organization and assets, to keep available the services of its current officers and employees assets and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with itit of business in all material respects.
(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 or (including in connection with the Exchange AgreementConversions), (iii) as may be required by applicable Law, Law (including COVID-19 Measures) or (iv) otherwise consented to by Parent Isla in writing (which such consent shall not to be unreasonably withheld, delayed conditioned or conditioneddelayed), until the earlier of the Merger Effective Time and the termination of this Agreement pursuant to Article VIII the Company shall not, and shall not permit its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent Isla as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards Award, Company PSU Award or Company Stock Option Award outstanding as of the date hereof, or issued after the date hereof in accordance with this Agreement, in accordance with the terms of the a Company Stock Equity Plan and applicable award agreements;
(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 or lapse of any restrictions on any Company Restricted Stock Unit Awards or Company PSU Awards or the exercise of any Company Stock Option Award, in each case, outstanding on the date hereof or issued after the date hereof in accordance with Section 6.1(b)(ix)(C) of this Agreement, in accordance with the terms of the a Company Stock Equity Plan and applicable award agreements; and (B) 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;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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), (1) any business or any corporation, partnership, association or other business organization or division thereof, in each case other than acquisitions thereof for which the consideration is less than in excess of $4,000,000 15,000,000 (inclusive of any assumed debt), individually or in the aggregate, or (2) any assets of any other Person, for which the consideration is in excess of $15,000,000 (inclusive of any assumed debt), individually or in the aggregate;
(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, ; other than (A) sales, leases, exchanges or dispositions for which the consideration is less than $500,000 10,000,000 individually or $20,000,000 in the aggregate; , (B) the sale of Hydrocarbons in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; ordinary course of business consistent with past practice, or (EC) asset swaps the fair market value sale of which are less than $500,000 Hydrocarbons in the aggregateordinary course of business;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly owned Subsidiaries of the Company;
(vii) change in any material respect its financial their material accounting principles, practices or methods 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, change or revoke any material Tax election or accounting method, but excluding any election that must be made periodically and is made consistent with past practiceelection, (B) change an annual Tax accounting period or adopt or change any material Tax accounting method, (C) file any Tax Return in a manner materially inconsistent with past practice or file any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset (E) enter into any material closing agreement with respect to Taxes, (F) settle or other reduction in compromise any material Tax liabilityProceeding or (G) consent to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax;
(ix) other than as (A) except to the extent required by applicable Law or by the terms of any Company Benefit Plan existing as of in effect on the date hereof, (A) increase or grant any increases in the compensation or benefits payable or to become payable to, or the benefits provided or to be provided to, any of its current or former Company Employees, directors, officers, employees or other individual service providers, other than salary or wage increases made in (i) outside the ordinary course of business consistent with respect past practice or (ii) to non-officer level employees and service providers (not to exceed 2% any individual who earns in the aggregate); excess of $150,000 in annual compensation, (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 equity-linked awards, or amend or modify the terms of any outstanding equity-based or equity-linked awards, pay any incentive or performance-based compensation or benefits or approve treatment except the grant of outstanding equity awards to the Company’s non-employee directors in connection with the Transactions that is inconsistent with the treatment contemplated by Section 3.3; ordinary course of business, (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current or former Company Employee, director, officer, employee officer or individual service provider; (E) pay any cash bonuses, other than annual cash bonuses in the ordinary course of business and consistent with past practice as required by a Company Plan existing as of the date hereof and set forth on Schedule 4.10(a) of the Company Disclosure Letter; (F) establish any Company Benefit Plan that which was not in existence prior to as of the date of this Agreement, or amend any such plan or terminate any Company Benefit Plan arrangement in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing or terminate any benefits thereunder Company Plan, in each case, except as required by Law or otherwise resulting in increased costs to the Company; (G) transfer, hire or promote terminate (other than for cause) any employee Company Employee or engage any other individual service provider (provider, in each case who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary earns in excess of $150,000 or any executive officer, in each case, other than for cause; or annual compensation;
(Ix) enter into, amend or terminate into any collective bargaining agreement agreements or other agreements with any labor union, works council council, or other representative of employees, or recognize any labor organizationunion, works council, or other labor organization as the bargaining representative of any employees;
(xxi) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) 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 the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes that is Subject Indebtedness, in an amount not to exceed $25,000,00020,000,000, (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 any of the Companyits Subsidiaries, (3) that is incurred or assumed in connection with any acquisition permitted by pursuant to Section 6.1(b)(iv), ) or (4) additional Indebtedness in the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4)foregoing;
(xixii) (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, amendmodify or amend in any material respect, terminate or assign, or waive any material rights under, or assign any rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any AffiliateContract;
(xiii) 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 in each case a value in excess of $500,000 2,000,000 in the aggregate;
(xiv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding with respect to Taxes, which are addressed in respect of Taxesclause (viii) above) other than (A) the settlement of such proceedings Proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 2,000,000 in the aggregate aggregate; and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.106.9;
(xv) make or commit to make any capital expenditures that are, in the aggregate greater than 110120% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter the period indicated as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letter, except for capital expenditures (x) to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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 environment (provided that the Company shall notify Parent Isla of any such emergency expenditure as soon as reasonably practicable)) or (y) related to onshore plugging and abandonment obligations;
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(xvii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the material insurance policies of the Company and its Subsidiaries at a level at least comparable to current levels or otherwise the extent commercially reasonable in a manner inconsistent with past practicethe Company’s business judgment in light of prevailing conditions in the insurance market;
(xviiixvii) take any action action, or omit to take cause any action to be taken, which action would prevent or impede, or that is could reasonably likely be expected to cause any of prevent or impede, the conditions to Transactions from qualifying for the Merger set forth in Article VII to not be satisfied;
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000Intended Tax Treatment; or
(xxxviii) 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. (a) Except The Company agrees that, except (i) as set forth on Schedule 6.1(a7.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures), Law or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditionedconditioned with respect to clause (A), the Company covenants and agrees that), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIIIIX, it (A) the Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable best efforts to (1) conduct its businesses in all material respects in the Ordinary Course, including by using reasonable best efforts to ordinary course consistent with past practice and (2) preserve substantially intact in all material respects its present business organization, goodwill and assets, to keep available the services of its current officers and employees organization and preserve its existing relationships with Governmental Entities its key business relationships, vendors and counterparties, (B) the Company shall, and shall cause each of its significant customersSubsidiaries to, suppliersuse commercially reasonable efforts to conduct its business in compliance in all material respects with applicable Laws and (C) the Company shall maintain its status as a REIT (until immediately prior to the Merger and without regard to the effects of the transactions contemplated by this Agreement); provided, licensorshowever, licensees, distributors, lessors and others having significant business dealings that no action by the Company or its Subsidiaries with itrespect to the matters specifically addressed by any provision of Section 7.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision of Section 7.1(b).
(b) Except (iw) as set forth on the corresponding subsection of Schedule 6.1(b7.1(b) of the Company Disclosure Letter, (iix) as expressly permitted or required by this Agreement or the Exchange Agreement, (iiiy) as may be required by applicable Law, Law or (ivz) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditionedconditioned with respect to clauses (iii), (v), (vi), (vii), (viii), (x), (xi) and (xii)), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII IX, the Company shall not, and shall not permit any of its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 for: (1) regular quarterly dividends and distributions by a direct or indirect wholly-owned Subsidiary payable in respect of the Company Common Stock at a rate not to exceed the Core Earnings of the Company for such quarter ; (2) regular quarterly dividends payable in respect of the Company Preferred Stock consistent with past practice and the terms of such Company Preferred Stock; (3) dividends or other distributions to the Company by any directly or another direct or indirect wholly-indirectly wholly owned Subsidiary of the Company; (4) without duplication of the amounts described in clauses (1) through (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 required under the Organizational Documents of the Company or such Subsidiary; or (5) any dividend to the extent authorized, declared and paid in accordance with Section 7.18; (B) split, combine, exchange, subdivide, recapitalize subdivide 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 redeem, exchange or otherwise acquire, or offer to purchase, redeem redeem, exchange or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Companyits Subsidiaries, except as required by the terms Organizational Documents of the Company or any capital stock Subsidiary of the Company or equity interest of a Subsidiary any Company Plan, in each case, existing and disclosed to Parent as of the date hereof (or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of granted following the date hereof, of this Agreement in accordance with the terms of the Company Stock Plan and applicable award agreementsthis 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 intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the issuance or delivery of Company Common Stock upon the vesting or lapse of any restrictions on any Company Restricted Stock Unit Awards or other awards granted under the Company Equity Plan and outstanding on the date hereof or issued in accordance compliance with the terms of the Company Stock Plan and applicable award agreementsclause (B) below; and (B) issuances by a wholly-owned of Company Restricted Stock, Company Performance Units, Company Dividend Equivalent Rights or other awards granted under the Company Equity Plan to employees, directors and other service providers in amounts and at times consistent with past practice, not to exceed the aggregate number of shares (including shares of Company Restricted Stock and Company Dividend Equivalent Rights) set forth on Schedule 7.1(b)ii) of the Company Disclosure Letter; and (C) shares of Company Capital Stock or capital stock or other ownership interests of any 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 Companyissued as a dividend made in accordance with Section 7.1(b)(i);
(iii) (A) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries or (other than ministerial changes)B) waive any stock ownership limit or create any exceptions to any stock ownership limit under the Company’s Organizational Documents;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction other than another wholly owned Subsidiary 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 or any business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) transactions between the Company and a wholly owned Subsidiary of the Company or between or among wholly owned Subsidiaries of the Company, or (2) acquisitions for which the consideration is less than $4,000,000 in the aggregateordinary course of business consistent with past practice of agency residential mortgage-backed securities, U.S. treasuries or other assets or securities permitted under the Company’s investment guidelines, including derivative securities and other instruments used for the purpose of hedging interest rate risk (collectively, “Company Portfolio Securities”);
(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, any material portion of its assets or propertiesassets, other than sales, leases or dispositions of assets (A) salesthat, leases, exchanges or dispositions for which the consideration is less if other than $500,000 in the aggregate; ordinary course of business consistent with past practice, involve consideration that constitutes fair market value therefor and does not exceed $1,000,000 individually or $3,000,000 in the aggregate or (B) the sale of Hydrocarbons made in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries ordinary course of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 in the aggregatebusiness consistent with past practice;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of the Company or any of its Subsidiaries;
(vii) change in any material respect its financial accounting principles, practices or methods in a manner 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, change or revoke any material Tax election or accounting method, but excluding any election that must be made periodically and is made in the ordinary course of business consistent with past practice, (B) file any material amended Tax Return, if required by Law or (C) except if and to the extent otherwise required by 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 Lawprovisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt or change any Tax accounting period or material method of Tax accounting, file any material amended Tax Return 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 than on proceeding relating to a basis consistent material amount of Taxes, enter into any closing or similar agreement with past practiceany Taxing Authority, (D) consent surrender any right to claim a material refund of Taxes or agree to any extension or waiver of the limitation period applicable to any material claim or assessment in respect statute of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement limitations with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liabilityamount of Taxes;
(ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, executive officers or any other employees or other individual service providers, other than salary otherwise grant any new awards under any Company Plan; or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (B) take become party to, enter into, adopt or otherwise establish any action to accelerate the vesting or lapsing of restrictions or paymentemployment, or fund or in any other way secure the paymentbonus, of compensation or benefits; (C) grant any new equity-based or equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current retirement contract or former director, officer, employee or service provider; (F) establish any Company Benefit Plan that was not in existence prior to the date of this AgreementPlan, or amend or terminate modify any employment, bonus, severance or retirement contract or Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Company; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any labor union, works council or labor organization;
(x) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) 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 (Ano action will be a violation of this Section 7.1(b)(ix) and (B) shall not restrict the incurrence of Indebtedness if it is taken (1) pursuant to Section 3.2 or as permitted under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000Section 7.1(b)(ii), (2) by the Company that is owed in order to any wholly-owned Subsidiary of the Company comply with applicable Law or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, (3) incurred pursuant to a Company Plan existing on the date hereof;
(x) make any loans, advances or assumed in connection with capital contributions to, or investments in, any acquisition permitted by Section 6.1(b)(iv)other Person, except (4A) additional Indebtedness for loans among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries or (B) advances for reimbursable employee expenses in the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation ordinary course of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4)business consistent with past practice;
(xi) (A) enter into any contract that would be a Company Contract if it were in effect on the date of this AgreementContract, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including Contract, and, for the renewal avoidance of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each casedoubt, with respect to Sections 4.20(a)(xiiiclauses (A) and 4.20(a)(xiv(B), except the Company may enter into, modify or terminate any of the foregoing contracts so long as (x) only, it is in the Ordinary Course orordinary course of business consistent with past practice, (Cy) except it would not reasonably be expected to prevent or materially delay the consummation of the Transactions and (z) it is not materially adverse to the extent necessary to remain Company and its Subsidiaries, taken as a whole, including any termination or renewal in compliance accordance with the terms of any existing Company Credit Facilities, enter into Contract that occurs automatically without any material Derivative Transactionaction (other than notice of renewal) by Company or any Subsidiary of the Company;
(xii) other than agreements, arrangements pursuant to Section 7.11 and other than the settlement of any Proceeding (A) reflected or reserved against on the balance sheet of the Company Contracts made (or in the Ordinary Course, on terms no less favorable notes thereto) and (B) that would not reasonably be expected to restrict the operations of the Company and its Subsidiaries than those generally being provided Subsidiaries, settle or offer or propose to or available from unrelated third partiessettle, and in each case involving aggregate payments of less than $500,000any Proceeding (excluding any audit, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract claim or other transaction with any Affiliate;
(xiiiproceeding in respect of Taxes) cancel, modify involving a payment or waive any debts or claims held other transfer of value by the Company or any of its Subsidiaries exceeding $250,000 individually, or waive $1,000,000 in the aggregate or involving the award of injunctive or other equitable relief against the Company or any of its Subsidiaries or any admission of wrongdoing;
(xiii) take any action, or 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 or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be;
(xiv) 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 or any derivative financial instruments or arrangements, or issue or sell any debt securities or calls, options, warrants or other rights held to acquire any debt securities (directly, contingently or otherwise); provided, however, 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, (B) transactions having a maturity or term not greater than 180 days pursuant to the Company’s master repurchase agreements to finance the purchase price of assets in the ordinary course of business consistent with past practice or refinance the Company’s repurchase obligations pursuant to such master repurchase agreements when due, (C) guarantees by the Company of Indebtedness of its Subsidiaries or guarantees by the Subsidiaries of the Company of Indebtedness of the Company or any other Subsidiaries of the Company, which Indebtedness is incurred in compliance with the immediately preceding clause (B), (D) dollar roll financing transactions pursuant to the Company’s master securities forward transactions agreements to finance the purchase price of agency “To Be Announced” agency mortgage-backed securities in the ordinary course of business or (E) any derivative financial instruments or arrangements entered into or incurred by the Company or any of its Subsidiaries having in each case a value in excess of $500,000 in the aggregateordinary course of business consistent with past practice for the purpose of fixing or hedging interest rate and not for speculative purposes;
(xivxv) waivetake any action, releaseor fail to take any action, assign, settle which action or compromise or offer or propose failure would reasonably be expected to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding in respect of Taxes) other than (A) the settlement of such proceedings involving only the payment of monetary damages by cause the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xv) make or commit to make any capital expenditures that are, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in required to be registered as an investment company under the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Investment Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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)Act;
(xvi) take enter into any actiontransactions or contracts with (i) any Affiliates, cause or (ii) any action other Person that would be required 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, disclosed by the Integrated Mergers, taken together, from qualifying as a reorganization within the meaning Company under Item 404 of Section 368(a) Regulation S-K of the CodeSEC;
(xvii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the insurance policies enter into any new line of the Company and its Subsidiaries at a level at least comparable to current levels or otherwise in a manner inconsistent with past practicebusiness;
(xviii) take amend in any action material respect the investment policy of the Company or omit to take any action that is reasonably likely to cause any of its Subsidiaries as in effect on the conditions date hereof, or fail to the Merger set forth comply with such investment policy in Article VII to not be satisfiedany material respect;
(xix) elect not to participate with respect to take any proposed operation regarding any affirmative action that would result in an increase in the Company’s portfolio leverage beyond current levels as of the Oil and Gas Properties that involves capital expenditures June 30, 2021 (net to the interest of the Company and its Subsidiaries) in excess of $250,000other than nominal increases); or
(xx) authorize, agree or enter into any arrangement or understanding to take any action that is prohibited by this Section 6.1(b7.1(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 Board, 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.
Appears in 1 contract
Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures)the rules and regulations of the NYSE 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 shallshall use its reasonable best efforts to, and shall cause each of its Subsidiaries to, to use its reasonable best efforts to to, conduct its businesses in the Ordinary Course, including by using and use commercially reasonable best efforts to preserve substantially intact its present business organization, goodwill and assets, to 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 Governmental Entities and its significant material customers, suppliers, licensors, licensees, distributors, lessors and others having significant 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 or the Exchange Agreement, (iii) as may be required by applicable Law, or (iv) 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 (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):
(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, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreements;
(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 or lapse of any restrictions on any Company Restricted Stock Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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 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 $4,000,000 in the aggregate;
(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, other than (A) sales, leases, exchanges or dispositions for which the consideration is less than $500,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 in the aggregate;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;
(vii) change in any material respect its financial accounting principles, practices or methods 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, change or revoke any material Tax election or accounting method, but excluding any election that must be made periodically and is made consistent with past practice, (B) file any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability;
(ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (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 individual service providers, other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or service provider; (F) establish any Company Benefit Plan that was not in existence prior to the date of this Agreement, or amend or terminate any Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Company; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any labor union, works council or labor organization;
(x) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) 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 the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, (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 the Ordinary Course in an amount not to exceed $1,500,000 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 that would be a Company Contract if it were in effect on the date of this Agreement, (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliate;
(xiii) 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 in each case a value in excess of $500,000 in the aggregate;
(xiv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding in respect of Taxes) other than (A) the settlement of such proceedings involving only the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xv) make or commit to make any capital expenditures that are, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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);
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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) 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;
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or
(xx) agree to take any action that is prohibited by this Section 6.1(b).,
Appears in 1 contract
Samples: Merger Agreement (Conocophillips)
Conduct of Company Business Pending the Merger. (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 or (including pursuant to the Exchange AgreementTRA Waiver and, (iii) for the avoidance of doubt, the Exchanges and the Conversion), as may be required by applicable Law, (including any COVID-19 Measures), or (iv) otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), during the Company covenants and agrees that, period from the execution of this Agreement until the earlier to occur of the Effective Time Closing and the termination of this Agreement pursuant to in accordance with Article VIIIVIII (the “Interim Period”), the Company covenants and agrees that it shall, and shall cause each of its Subsidiaries to, use commercially reasonable best efforts to conduct its businesses in the Ordinary Courseordinary course; provided, including however, that no action or inaction by using reasonable best efforts the Company or its Subsidiaries with respect to preserve substantially intact its present business organization, goodwill and assets, to keep available the services matters specifically addressed by any provision of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with itSection 6.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other 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 or (including pursuant to the Exchange AgreementTRA Waiver and, (iii) for the avoidance of doubt, the Exchanges and the Conversion), as may be required by applicable Law, or (iv) otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), until during the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII Interim Period, the Company shall not, and shall not permit its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 (x) dividends and distributions by a direct or indirect wholly-owned Subsidiary of the Company Holdco to the Company Holdco or another direct or indirect wholly-owned Subsidiary of Company Holdco, (y) dividends, distributions or other payments from Company Holdco to the CompanyCompany or (z) tax distributions in accordance with the Company Holdco LLC Agreement; (B) split, combine, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary or as contemplated by any Company Plan in each case existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms of the Company Stock Plan and applicable award agreementsthis 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 issuance of Company Common Stock upon the vesting or lapse of any restrictions on any shares related to Company Restricted Stock Unit Awards RSUs or other awards granted under the Company Equity Plans and outstanding on the date hereof or issued in compliance with clause (B) below; (B) the issuance of equity awards granted under the Company Equity Plans in accordance with Schedule 6.1(b)(ii); (C) the issuance of Company Common Stock pursuant to the Company ATM Agreement in accordance with Schedule 6.1(b)(ii); (D) the issuance of Company Common Stock upon the exercise of any Company Options; (E) the issuance of Company Common Stock upon the conversion of any Company Preferred Stock; (F) the issuance of Company Common Stock upon the exercise of any Company Warrants in accordance with the terms of the Company Stock Plan and applicable award agreementswarrant agreement; and (BG) issuances by a wholly-owned Subsidiary of the Company or Company Holdco of such Subsidiary’s capital stock or other equity interests to the Company or Company Holdco or any other wholly-owned Subsidiary of the CompanyCompany or Company Holdco; and (H) issuances of any Company Common Stock in connection with a redemption of Company Holdco Units in accordance with the Company Holdco LLC Agreement;
(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes)or form any new Subsidiary of the Company;
(iv) (A) merge, consolidate, combine or amalgamate with any Person other than between wholly-owned Subsidiaries of the Company or effect any division transaction Company Holdco 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 business or any corporation, partnership, association or other business organization or division thereof, in each case other than (x) 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, (y) acquisitions of supplies or materials (other than Bitcoin miners) in the ordinary course of business consistent with past practices or (z) acquisition of Intellectual Property rights pursuant to non-exclusive licenses in the ordinary course of business consistent with past practices;
(v) sell, lease or otherwise dispose of (including by virtue of failure to exercise any lease renewal options), or agree to sell, lease or otherwise dispose of, any assets or properties (x) that are neither Bitcoin miners nor electrical equipment of any substation, transformer, data center or other infrastructure between any substation and data center and (y) for which the consideration is less than $1,000,000 individually or $4,000,000 in the aggregate;
(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, ; other than (A) salespursuant 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)(v) of the Company Disclosure Letter, leases, exchanges or dispositions for which the consideration is less than $500,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; (C) sales, leases or other dispositions among the Company and its wholly owned Subsidiaries (or Company Holdco and its wholly owned Subsidiaries) or among wholly owned Subsidiaries of the Company; Company (Dor Company Holdco), or (C) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value ordinary course of which are less than $500,000 in the aggregatebusiness consistent with past practice;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to acquire any material real property;
(vii) adopt a plan of complete or partial liquidationliquidation or dissolution or effect a reorganization, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly-owned Subsidiaries of the Company or Company Holdco;
(viiviii) change in any material respect its financial their material accounting principles, practices or methods 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;
(viiiix) except in the ordinary course of business: (A) make, change or revoke any material Tax election election, (B) change an annual Tax accounting period, (C) adopt or change any material Tax accounting method, but excluding any election that must be made periodically and is made consistent with past practice, (BD) file any material amended Tax Return, (CE) except to the extent otherwise required by applicable Lawenter into any material closing agreement with a Taxing Authority, file (F) settle or compromise any material Tax Return other than on a basis consistent with past practice, liability of the Company or any of its Subsidiaries; or (DG) consent to any extension or waiver of the statute of limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement with respect to Taxes, (F) enter into Taxes of the Company or any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liabilityof its Subsidiaries;
(ixx) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (A) subject to the restrictions under Section 6.1(b)(ii), grant any increases in equity or equity-based awards or increase the compensation or benefits payable or to become payable provided to any of its current or former directors, officers, employees or other individual service providersproviders with annual compensation in excess of $150,000, other than salary except as required by applicable Law, pursuant to a Company Plan existing as of the date hereof, or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate)as permitted by this Agreement; (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 equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (D) pay or agree to pay any current or former director, officer, employee or other individual service provider, any pension, retirement allowance or other employee benefit not required by the terms of any Company Plan or applicable Law existing as of the date hereof; (C) grant or provide any change in control, severance, termination, retention or similar payments or benefits to any current or former director, officer, employee or other individual service provider any pensionprovider, retirement allowance or other benefit not in each case except as required by the terms of any applicable Law, pursuant to a Company Benefit Plan existing as of the date hereof, or as permitted by this Agreement; (D) establish, adopt, enter into, terminate or amend any new or any existing Company Plan or any plan, agreement, program, policy or other arrangement that would be a Company Plan if it were in existence as of the date hereof, other than (x) in connection with routine, immaterial or ministerial amendments to health and welfare plans that do not materially increase benefits or result in a material increase in administrative costs and (y) offer letter agreements for employees hired following the date of this Agreement where such agreements do not provide for severance or termination benefits except as required by applicable Law; or (E) enter into amend or modify any newperformance criteria, metrics or materially amend any existing, employment or severance or termination agreement with any current or former director, officer, employee or service provider; (F) establish targets under any Company Benefit Plan that was not such that, as compared to those criteria, metrics or targets under any Company Plan in existence prior to effect as of the date of this Agreement, the performance criteria, metrics or amend targets would reasonably be expected to be more likely to be achieved than in the absence of such amendment or terminate modification;
(A) modify, renew, extend, or enter into any labor union agreement, collective bargaining agreement or any other labor-related agreements or arrangements with any labor union, labor organization or works council, or (B) voluntarily recognize or certify any labor union, labor organization, works council, or other representative of a group of employees of the Company Benefit Plan in existence on or its Subsidiaries as the date collective bargaining representative for any employees of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder Company or otherwise resulting in increased costs to the Company; its Subsidiaries;
(Gxii) (A) hire or promote engage, or make an offer to hire or engage, any individual as, or terminate the employment or services of, an officer, employee, or other individual service provider of the Company or any of its Subsidiaries with an annual base salary or fees in excess of $150,000 (other than hiring “at-will” employees or service providers without severance or hiring or engaging, or making an offer to hire or engage, any individual to replace an officer, employee or engage individual service providers who has resigned or had his or her employment or engagement terminated on the same or substantially similar terms and conditions of employment or engagement, as applicable, as similarly-situated individuals of the Company and its Subsidiaries or the person being replaced, including base compensation or fee arrangement and bonus opportunity, if applicable); or (B) other than for cause (consistent with past practice), terminate the employment or engagement of any other current officer, employee or individual service provider (who is a natural person) who is (of the Company or would be) any of its Subsidiaries with an executive officer or who has (or would have) an annualized annual base salary or fees in excess of $150,000; ;
(Hxiii) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officerwaive, in each case, other than for cause; or (I) enter intorelease, amend or terminate fail to enforce the restrictive covenant obligations of any collective bargaining agreement with any labor unioncurrent or former employee, works council independent contractor, officer or labor organizationdirector of the Company or its Subsidiaries;
(xxiv) (A) other than in the ordinary course of business consistent with past practice, incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) create any material Encumbrances on any material 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 the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, (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 the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4);
(xixv) (A) enter into any contract that would be a Company Contract if it were in effect on the date of this Agreement, except in the ordinary course of business consistent with past practice and as would not prevent or materially delay the consummation of the Transactions, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xiv) onlyContract, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance with the Company Credit Facilities, enter into any material Derivative Transaction;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable a manner that is materially adverse to the Company and its Subsidiaries than those generally being provided to Subsidiaries, taken as a whole, or available from unrelated third parties, and in each case involving aggregate payments which could prevent or materially delay the consummation of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliatethe Transactions;
(xiiixvi) 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 in each case a value in excess of $500,000 in the aggregate;
(xiv) 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 (A) the settlement of such proceedings Proceedings involving only the payment of monetary damages (to the extent not covered by insurance) by the Company or any of its Subsidiaries of any amount not exceeding $500,000 individually or $1,000,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or involving no admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10wrongdoing or injunctive or other equitable relief;
(xvxvii) make or commit to make any capital expenditures that are, or incur any obligations or liabilities in the aggregate greater than 110% respect thereof during any fiscal quarter in excess of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in on Schedule 6.1(b)(xv6.1(b)(xvii) of the Company Disclosure Letter, except for capital expenditures Letter with respect to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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);
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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 practicefiscal quarter;
(xviii) take engage in any action transaction with, or omit to take enter into any action that is reasonably likely to cause agreement, arrangement or understanding with, any Affiliate of the conditions Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to the Merger set forth in Article VII be disclosed pursuant to not be satisfiedItem 404;
(xix) elect not to participate amend, modify, terminate, or enter into any agreement with respect to any proposed operation regarding any to, the Tax Receivable Agreement (for the avoidance of doubt, other than as contemplated by the Oil and Gas Properties that involves capital expenditures TRA Waiver) or the TRA Waiver (net to for the interest avoidance of the Company and its Subsidiaries) in excess of $250,000doubt, other than as contemplated thereby); or
(xx) 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. (a) Except The Company agrees that, except (i) as set forth on Schedule 6.1(a7.1a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement or the Exchange Agreement, (iii) as may be required by applicable Law, (including any COVID-19 Measures), Law or (iv) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditionedconditioned with respect to clause (A), the Company covenants and agrees that), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIIIIX, it (A) the Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable best efforts to (1) conduct its businesses in all material respects in the Ordinary Course, including by using reasonable best efforts to ordinary course consistent with past practice and (2) preserve substantially intact in all material respects its present business organization, goodwill and assets, to keep available the services of its current officers and employees organization and preserve its existing relationships with Governmental Entities its key business relationships, vendors and counterparties, (B) the Company shall, and shall cause each of its significant customersSubsidiaries to, suppliersuse commercially reasonable efforts to conduct its business in compliance in all material respects with applicable Laws and (C) the Company shall maintain its status as a REIT (until immediately prior to the Merger and without regard to the effects of the transactions contemplated by this Agreement); provided, licensorshowever, licensees, distributors, lessors and others having significant business dealings that no action by the Company or its Subsidiaries with itrespect to the matters specifically addressed by any provision of Section 7.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision of Section 7.1(b).
(b) Except (iw) as set forth on the corresponding subsection of Schedule 6.1(b7.1b) of the Company Disclosure Letter, (iix) as expressly permitted or required by this Agreement or the Exchange Agreement, (iiiy) as may be required by applicable Law, Law or (ivz) as otherwise consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditionedconditioned with respect to clauses (iii), (v), (vi), (vii), (viii), (x), (xi) and (xii)), until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII IX, the Company shall not, and shall not permit any of its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):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 for: (1) regular quarterly dividends and distributions by a direct or indirect wholly-owned Subsidiary payable in respect of the Company Common Stock at a rate not to exceed the Core Earnings of the Company for such quarter ; (2) regular quarterly dividends payable in respect of the Company Preferred Stock consistent with past practice and the terms of such Company Preferred Stock; (3) dividends or other distributions to the Company by any directly or another direct or indirect wholly-indirectly wholly owned Subsidiary of the Company; (4) without duplication of the amounts described in clauses (1) through (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 required under the Organizational Documents of the Company or such Subsidiary; or (5) any dividend to the extent authorized, declared and paid in accordance with Section 7.18; (B) split, combine, exchange, subdivide, recapitalize subdivide 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 redeem, exchange or otherwise acquire, or offer to purchase, redeem redeem, exchange or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Companyits Subsidiaries, except as required by the terms Organizational Documents of the Company or any capital stock Subsidiary of the Company or equity interest of a Subsidiary any Company Plan, in each case, existing and disclosed to Parent as of the date hereof (or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of granted following the date hereof, of this Agreement in accordance with the terms of the Company Stock Plan and applicable award agreementsthis 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 intointo or exchangeable for, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the issuance or delivery of Company Common Stock upon the vesting or lapse of any restrictions on any Company Restricted Stock Unit Awards or other awards granted under the Company Equity Plan and outstanding on the date hereof or issued in accordance compliance with the terms of the Company Stock Plan and applicable award agreementsclause (B) below; and (B) issuances by a wholly-owned of Company Restricted Stock, Company Performance Units, Company Dividend Equivalent Rights or other awards granted under the Company Equity Plan to employees, directors and other service providers in amounts and at times consistent with past practice, not to exceed the aggregate number of shares (including shares of Company Restricted Stock and Company Dividend Equivalent Rights) set forth on Schedule 7.1b)ii) of the Company Disclosure Letter; and (C) shares of Company Capital Stock or capital stock or other ownership interests of any 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 Companyissued as a dividend made in accordance with Section 7.1(b)(i);
(iii) (A) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries or (other than ministerial changes)B) waive any stock ownership limit or create any exceptions to any stock ownership limit under the Company’s Organizational Documents;
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction other than another wholly owned Subsidiary 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 or any business or any corporation, partnership, association or other business organization or division thereof, in each case other than (1) transactions between the Company and a wholly owned Subsidiary of the Company or between or among wholly owned Subsidiaries of the Company, or (2) acquisitions for which the consideration is less than $4,000,000 in the aggregateordinary course of business consistent with past practice of agency residential mortgage-backed securities, U.S. treasuries or other assets or securities permitted under the Company’s investment guidelines, including derivative securities and other instruments used for the purpose of hedging interest rate risk (collectively, “Company Portfolio Securities”);
(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue lease or otherwise dispose of, any material portion of its assets or propertiesassets, other than sales, leases or dispositions of assets (A) salesthat, leases, exchanges or dispositions for which the consideration is less if other than $500,000 in the aggregate; ordinary course of business consistent with past practice, involve consideration that constitutes fair market value therefor and does not exceed $1,000,000 individually or $3,000,000 in the aggregate or (B) the sale of Hydrocarbons made in the Ordinary Course; (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries ordinary course of the Company; (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or (E) asset swaps the fair market value of which are less than $500,000 in the aggregatebusiness consistent with past practice;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of the Company or any of its Subsidiaries;
(vii) change in any material respect its financial accounting principles, practices or methods in a manner 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, change or revoke any material Tax election or accounting method, but excluding any election that must be made periodically and is made in the ordinary course of business consistent with past practice, (B) file any material amended Tax Return, if required by Law or (C) except if and to the extent otherwise required by 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 Lawprovisions of Section 856 of the Code, as the case may be, make or change any material Tax election, adopt or change any Tax accounting period or material method of Tax accounting, file any material amended Tax Return 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 than on proceeding relating to a basis consistent material amount of Taxes, enter into any closing or similar agreement with past practiceany Taxing Authority, (D) consent surrender any right to claim a material refund of Taxes or agree to any extension or waiver of the limitation period applicable to any material claim or assessment in respect statute of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar agreement limitations with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax Proceeding, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liabilityamount of Taxes;
(ix) other than as required by applicable Law or by the terms of any Company Benefit Plan existing as of the date hereof, (A) grant any increases in the compensation or benefits payable or to become payable to any of its current or former directors, officers, executive officers or any other employees or other individual service providers, other than salary otherwise grant any new awards under any Company Plan; or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (B) take become party to, enter into, adopt or otherwise establish any action to accelerate the vesting or lapsing of restrictions or paymentemployment, or fund or in any other way secure the paymentbonus, of compensation or benefits; (C) grant any new equity-based or equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, employment or severance or termination agreement with any current retirement contract or former director, officer, employee or service provider; (F) establish any Company Benefit Plan that was not in existence prior to the date of this AgreementPlan, or amend or terminate modify any employment, bonus, severance or retirement contract or Company Benefit Plan in existence on the date of this Agreement, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs to the Company; (G) hire or promote any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) an annualized base salary in excess of $150,000; (H) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with any labor union, works council or labor organization;
(x) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) 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 (Ano action will be a violation of this Section 7.1(b)(ix) and (B) shall not restrict the incurrence of Indebtedness if it is taken (1) pursuant to Section 3.2 or as permitted under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000Section 7.1(b)(ii), (2) by the Company that is owed in order to any wholly-owned Subsidiary of the Company comply with applicable Law or by any Subsidiary of the Company that is owed to the Company or a wholly-owned Subsidiary of the Company, (3) incurred pursuant to a Company Plan existing on the date hereof;
(x) make any loans, advances or assumed in connection with capital contributions to, or investments in, any acquisition permitted by Section 6.1(b)(iv)other Person, except (4A) additional Indebtedness for loans among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries or (B) advances for reimbursable employee expenses in the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation ordinary course of any Encumbrances securing any Indebtedness permitted by the foregoing clauses (1), (2), (3) or (4)business consistent with past practice;
(xi) (A) enter into any contract that would be a Company Contract if it were in effect on the date of this AgreementContract, or (B) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including Contract, and, for the renewal avoidance of an existing Company Contract on substantially the same terms in the Ordinary Course), other than in each casedoubt, with respect to Sections 4.20(a)(xiiiclauses (A) and 4.20(a)(xiv(B), except the Company may enter into, modify or terminate any of the foregoing contracts so long as (x) only, it is in the Ordinary Course orordinary course of business consistent with past practice, (Cy) except it would not reasonably be expected to prevent or materially delay the consummation of the Transactions and (z) it is not materially adverse to the extent necessary to remain Company and its Subsidiaries, taken as a whole, including any termination or renewal in compliance accordance with the terms of any existing Company Credit Facilities, enter into Contract that occurs automatically without any material Derivative Transactionaction (other than notice of renewal) by Company or any Subsidiary of the Company;
(xii) other than agreements, arrangements pursuant to Section 7.11 and other than the settlement of any Proceeding (A) reflected or reserved against on the balance sheet of the Company Contracts made (or in the Ordinary Course, on terms no less favorable notes thereto) and (B) that would not reasonably be expected to restrict the operations of the Company and its Subsidiaries than those generally being provided Subsidiaries, settle or offer or propose to or available from unrelated third partiessettle, and in each case involving aggregate payments of less than $500,000any Proceeding (excluding any audit, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract claim or other transaction with any Affiliate;
(xiiiproceeding in respect of Taxes) cancel, modify involving a payment or waive any debts or claims held other transfer of value by the Company or any of its Subsidiaries exceeding $250,000 individually, or waive $1,000,000 in the aggregate or involving the award of injunctive or other equitable relief against the Company or any of its Subsidiaries or any admission of wrongdoing;
(xiii) take any action, or 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 or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be;
(xiv) 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 or any derivative financial instruments or arrangements, or issue or sell any debt securities or calls, options, warrants or other rights held to acquire any debt securities (directly, contingently or otherwise); provided, however, 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, (B) transactions having a maturity or term not greater than 180 days pursuant to the Company’s master repurchase agreements to finance the purchase price of assets in the ordinary course of business consistent with past practice or refinance the Company’s repurchase obligations pursuant to such master repurchase agreements when due, (C) guarantees by the Company of Indebtedness of its Subsidiaries or guarantees by the Subsidiaries of the Company of Indebtedness of the Company or any other Subsidiaries of the Company, which Indebtedness is incurred in compliance with the immediately preceding clause (B), (D) dollar roll financing transactions pursuant to the Company’s master securities forward transactions agreements to finance the purchase price of agency “To Be Announced” agency mortgage-backed securities in the ordinary course of business or (E) any derivative financial instruments or arrangements entered into or incurred by the Company or any of its Subsidiaries having in each case a value in excess of $500,000 in the aggregateordinary course of business consistent with past practice for the purpose of fixing or hedging interest rate and not for speculative purposes;
(xivxv) waivetake any action, releaseor fail to take any action, assign, settle which action or compromise or offer or propose failure would reasonably be expected to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding in respect of Taxes) other than (A) the settlement of such proceedings involving only the payment of monetary damages by cause the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xv) make or commit to make any capital expenditures that are, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in required to be registered as an investment company under the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv) of the Investment Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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)Act;
(xvi) take enter into any actiontransactions or contracts with (i) any Affiliates, cause or (ii) any action other Person that would be required 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, disclosed by the Integrated Mergers, taken together, from qualifying as a reorganization within the meaning Company under Item 404 of Section 368(a) Regulation S-K of the CodeSEC;
(xvii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the insurance policies enter into any new line of the Company and its Subsidiaries at a level at least comparable to current levels or otherwise in a manner inconsistent with past practicebusiness;
(xviii) take amend in any action material respect the investment policy of the Company or omit to take any action that is reasonably likely to cause any of its Subsidiaries as in effect on the conditions date hereof, or fail to the Merger set forth comply with such investment policy in Article VII to not be satisfiedany material respect;
(xix) elect not to participate with respect to take any proposed operation regarding any affirmative action that would result in an increase in the Company’s portfolio leverage beyond current levels as of the Oil and Gas Properties that involves capital expenditures June 30, 2021 (net to the interest of the Company and its Subsidiaries) in excess of $250,000other than nominal increases); or
(xx) authorize, agree or enter into any arrangement or understanding to take any action that is prohibited by this Section 6.1(b7.1(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 Board, 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.
Appears in 1 contract
Samples: Merger Agreement (Benefit Street Partners Realty Trust, Inc.)
Conduct of Company Business Pending the Merger. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, Law (including any COVID-19 Measures), 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, and shall cause each of its Subsidiaries 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, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it; provided, however, that no action or inaction by the Company 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 other 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 or the Exchange Agreement, (iii) as may be required by applicable Law, 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 cause its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):not to:
(i) (A) declare, set aside or pay any dividends 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-wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly-owned Subsidiary of the Company; , (B) split, combine, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms as set forth on Schedule 6.1(b)(i) of the Company Stock Plan and applicable award agreementsDisclosure Letter;
(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 or lapse of any restrictions on any Company Restricted Stock Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 (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 of the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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, in each case other than (1) acquisitions for which the consideration is less than $4,000,000 of inventory, equipment or other similar assets in the aggregateordinary course of business or (2) pursuant to existing Contracts set forth on Schedule 6.1(b)(iv) of the Company Disclosure Letter;
(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, other than (A) pursuant to a Company Contract in effect on the date of this Agreement, set forth on Schedule 6.1(b)(v) of the Company Disclosure Letter, (B) sales, leases, exchanges or dispositions for which the consideration is less than $500,000 1,000,000 individually or $3,000,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; , (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; , (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or ordinary course of business consistent with past practice, (E) asset swaps the fair market value sale of which are less than $500,000 Hydrocarbons in the aggregateordinary course of business, or (F) swaps of assets or property, which may include cash consideration, of up to $2,000,000 in the aggregate for all such swap transactions;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly owned Subsidiaries of the Company;
(vii) change in any material respect its financial accounting principles, practices or methods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP GAAP, XXXXX or applicable Law;
(viii) (A) make, change or revoke any material Tax election or accounting methodelection, but excluding any election that must be made periodically and is made consistent with past practice, (B) change an annual Tax accounting period, adopt or change any material Tax accounting method, file any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar closing agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax ProceedingProceeding regarding any Taxes, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability;
(ix) other than 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 take such action could prevent or impede, the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(x) except as required by applicable Law or by the terms of any pursuant to an existing Company Benefit Plan existing as or, with respect to clauses (A), (B), (D), (E) and (G) below, in the ordinary course of the date hereofbusiness consistent with past practice, (A) grant or commit to grant any new increases in the compensation compensation, bonus, severance, termination pay or other benefits payable or to 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 individual service providersterms are comparable to those of the employee that he or she is replacing), other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 Benefit Plan, (C) grant or commit to grant any new equity-based or equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, offer letter or employment or severance or termination agreement with any current or former director, officerofficer or employee at or above the level of vice president, employee (E) pay or service provider; commit to pay any bonuses, other than the payment of annual or other short-term cash bonuses for completed performance periods, (F) establish establish, enter into or adopt any material Company Benefit Plan that which was not in existence prior to 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 Plan, in existence on the date of this Agreementeach case, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs except for changes to the Company; contractual terms of health and welfare plans made in the ordinary course of business, or (G) hire or promote terminate (other than for cause) any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) with an annualized base salary in excess of $150,000; 125,000 (Hexcept as is reasonably necessary to replace any employee);
(xi) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with recognize any labor union, works council council, or other labor organizationorganization as the bargaining representative of any employees;
(xxii) (A) incur, create create, assume, waive or assume release any Indebtedness or guarantee any such Indebtedness of another Person or (B) create 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 (A) and clause (B) shall not restrict the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, existing credit facilities or (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 the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses clause (1), (2), (3so long as borrowings under the Company Credit Facility do not exceed the amount set forth on Schedule 6.1(b)(xii) or (4)of the Company Disclosure Letter;
(xixiii) (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) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract Contracts on substantially the same terms in the Ordinary Courseordinary course of business consistent with past practice), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xivContracts of the type described in Section 5.19(a)(ix) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance ordinary course of business consistent with the Company Credit Facilities, enter into any material Derivative Transactionpast practice;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliate;
(xiiixiv) 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 in each case a value in excess of $500,000 200,000 individually or $1,000,000 in the aggregate;
(xivxv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding Proceedings (excluding any Proceeding in respect of Taxes) other 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, on a basis that would not (A) prevent or materially delay consummation of the settlement of such proceedings involving only Merger or the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate Transactions, and (B) as would not result in the imposition of any restriction on 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; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xvxvi) make or commit to make any capital expenditures that are, with respect to any fiscal quarter, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv6.1(b)(xvi) of the Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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);
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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) 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;; or
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or
(xx) agree or 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. (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 or the Exchange Agreement, (iii) as may be required by applicable Law, Law (including any COVID-19 Measures), 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, and shall cause each of its Subsidiaries 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, to keep available the services of its current officers and employees and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with it; provided, however, that no action or inaction by the Company 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 other 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 or the Exchange Agreement, (iii) as may be required by applicable Law, 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 cause its Subsidiaries to (in each case whether directly or indirectly or by merger, consolidation, division, operation of law or otherwise):not to:
(i) (A) declare, set aside or pay any dividends 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-wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly-owned Subsidiary of the Company; , (B) split, combine, exchange, subdivide, recapitalize 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 as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Parent as of the date hereof or to satisfy any applicable Tax withholding in respect of the vesting or settlement of any Company Restricted Stock Unit Awards outstanding as of the date hereof, in accordance with the terms as set forth on Schedule 6.1(b)(i) of the Company Stock Plan and applicable award agreementsDisclosure Letter;
(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 or lapse of any restrictions on any Company Restricted Stock Unit Awards outstanding on the date hereof in accordance with the terms of the Company Stock Plan and applicable award agreements; and (B) 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 (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 of the Company’s Subsidiaries (other than ministerial changes);
(iv) (A) merge, consolidate, combine or amalgamate with any Person or effect any division transaction 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, in each case other than (1) acquisitions for which the consideration is less than $4,000,000 of inventory, equipment or other similar assets in the aggregateordinary course of business or (2) pursuant to existing Contracts set forth on Schedule 6.1(b)(iv) of the Company Disclosure Letter;
(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, other than (A) pursuant to a Company Contract in effect on the date of this Agreement, set forth on Schedule 6.1(b)(v) of the Company Disclosure Letter, (B) sales, leases, exchanges or dispositions for which the consideration is less than $500,000 1,000,000 individually or $3,000,000 in the aggregate; (B) the sale of Hydrocarbons in the Ordinary Course; , (C) among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company; , (D) sales or dispositions of obsolete or worthless equipment in the Ordinary Course; or ordinary course of business consistent with past practice, (E) asset swaps the fair market value sale of which are less than $500,000 Hydrocarbons in the aggregateordinary course of business, or (F) swaps of assets or property, which may include cash consideration, of up to $2,000,000 in the aggregate for all such swap transactions;
(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly owned Subsidiaries of the Company;
(vii) change in any material respect its financial accounting principles, practices or methods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP GAAP, CXXXX or applicable Law;
(viii) (A) make, change or revoke any material Tax election or accounting methodelection, but excluding any election that must be made periodically and is made consistent with past practice, (B) change an annual Tax accounting period, adopt or change any material Tax accounting method, file any material amended Tax Return, (C) except to the extent otherwise required by applicable Law, file any material Tax Return other than on a basis consistent with past practice, (D) consent to any extension or waiver of the limitation period applicable to any material claim or assessment in respect of material Taxes, (E) enter into any material Tax allocation, sharing or indemnity agreement, any material Tax holiday agreement or other similar closing agreement with respect to Taxes, (F) enter into any closing agreement with respect to material Taxes, (G) settle or compromise any material Tax ProceedingProceeding regarding any Taxes, or (H) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability;
(ix) other than 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 take such action could prevent or impede, the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(x) except as required by applicable Law or by the terms of any pursuant to an existing Company Benefit Plan existing as or, with respect to clauses (A), (B), (D), (E) and (G) below, in the ordinary course of the date hereofbusiness consistent with past practice, (A) grant or commit to grant any new increases in the compensation compensation, bonus, severance, termination pay or other benefits payable or to 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 individual service providersterms are comparable to those of the employee that he or she is replacing), other than salary or wage increases made in the ordinary course of business with respect to non-officer level employees and service providers (not to exceed 2% in the aggregate); (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 Benefit Plan, (C) grant or commit to grant any new equity-based or equity-linked awards, amend or modify the terms of any outstanding equity-based or equity-linked 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 3.3; (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 Benefit Plan existing as of the date hereof; (E) enter into any new, or materially amend any existing, offer letter or employment or severance or termination agreement with any current or former director, officerofficer or employee at or above the level of vice president, employee (E) pay or service provider; commit to pay any bonuses, other than the payment of annual or other short-term cash bonuses for completed performance periods, (F) establish establish, enter into or adopt any material Company Benefit Plan that which was not in existence prior to 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 Plan, in existence on the date of this Agreementeach case, other than de minimis administrative amendments that do not have the effect of enhancing any benefits thereunder or otherwise resulting in increased costs except for changes to the Company; contractual terms of health and welfare plans made in the ordinary course of business, or (G) hire or promote terminate (other than for cause) any employee or engage any other service provider (who is a natural person) who is (or would be) an executive officer or who has (or would have) with an annualized base salary in excess of $150,000; 125,000 (Hexcept as is reasonably necessary to replace any employee);
(xi) terminate the employment of any employee or other service provider who has an annualized base salary in excess of $150,000 or any executive officer, in each case, other than for cause; or (I) enter into, amend or terminate any collective bargaining agreement with recognize any labor union, works council council, or other labor organizationorganization as the bargaining representative of any employees;
(xxii) (A) incur, create create, assume, waive or assume release any Indebtedness or guarantee any such Indebtedness of another Person or (B) create 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 (A) and clause (B) shall not restrict the incurrence of Indebtedness (1) under the Company Credit Facilities and the Notes in an amount not to exceed $25,000,000, existing credit facilities or (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 the Ordinary Course in an amount not to exceed $1,500,000 or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing clauses clause (1), (2), (3so long as borrowings under the Company Credit Facility do not exceed the amount set forth on Schedule 6.1(b)(xii) or (4)of the Company Disclosure Letter;
(xixiii) (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) modify, amend, terminate or assign, or waive or assign any rights under, any Company Contract (including the renewal of an existing Company Contract Contracts on substantially the same terms in the Ordinary Courseordinary course of business consistent with past practice), other than in each case, with respect to Sections 4.20(a)(xiii) and 4.20(a)(xivContracts of the type described in Section 4.19(a)(viii) only, in the Ordinary Course or, (C) except to the extent necessary to remain in compliance ordinary course of business consistent with the Company Credit Facilities, enter into any material Derivative Transactionpast practice;
(xii) other than agreements, arrangements or Company Contracts made in the Ordinary Course, on terms no less favorable to the Company and its Subsidiaries than those generally being provided to or available from unrelated third parties, and in each case involving aggregate payments of less than $500,000, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, arrangement, Company Contract or other transaction with any Affiliate;
(xiiixiv) 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 in each case a value in excess of $500,000 200,000 individually or $1,000,000 in the aggregate;
(xivxv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding Proceedings (excluding any Proceeding in respect of Taxes) other 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, on a basis that would not (A) prevent or materially delay consummation of the settlement of such proceedings involving only Merger or the payment of monetary damages by the Company or any of its Subsidiaries of any amount not exceeding $500,000 in the aggregate Transactions, and (B) as would not result in the imposition of any restriction on 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; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.10;
(xvxvi) make or commit to make any capital expenditures that are, with respect to any fiscal quarter, in the aggregate greater than 110% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for such fiscal quarter as set forth in Schedule 6.1(b)(xv6.1(b)(xvi) of the Company Disclosure Letter, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures of no more than $1,000,000 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);
(xvi) 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 Integrated Mergers, taken together, from qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(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) 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;; or
(xix) elect not to participate with respect to any proposed operation regarding any of the Oil and Gas Properties that involves capital expenditures (net to the interest of the Company and its Subsidiaries) in excess of $250,000; or
(xx) agree or commit to take any action that is prohibited by this Section 6.1(b).
Appears in 1 contract
