Forbearance Covenants. (a) Except (A) as expressly contemplated by this Agreement, (B) as set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter, (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (D) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not, and shall not permit any of its Subsidiaries, to: (i) amend the Organizational Documents of the Company or any of its Subsidiaries; (ii) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization; (iii) issue, sell or deliver, or agree or commit to issue, sell or deliver, any Company Securities or securities of any of the Subsidiaries of the Company, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii); (iv) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, any of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms; (i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest; (vi) (i) incur, assume or suffer any indebtedness for borrowed money or issue any debt securities, except, in each case, for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens; (vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); (viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries; (ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12; (x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority; (xi) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise any material Tax liability or any audit, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) of the Company Disclosure Letter and (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement and made available to Parent prior to the date of this Agreement;
Appears in 2 contracts
Samples: Merger Agreement (Infinera Corp), Merger Agreement (Nokia Corp)
Forbearance Covenants. Except (a) Except (A) as expressly contemplated by this Agreement, (Bb) as set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter, (Cc) as required by applicable Law or OrderLaw, or Contracts set forth (d) as necessary in Sections 5.1 or 5.2 response to COVID-19 and any COVID-19 Measures, including to (A) protect the health and safety of the Company’s and its Subsidiaries’ employees, suppliers, partners and other individuals having business dealings with the Company Disclosure Letter and its Subsidiaries or (DB) respond to third-party supply or service disruptions caused by COVID-19 or any COVID-19 Measures; provided that the Company has consulted with Parent and considered in good faith any recommendations of Parent or (e) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayeddelayed and shall be deemed given if Parent provides no written response within (x) five (5) Business Days after a written request by the Company for such consent or (y) one (1) Business Day after a written request by the Company for such consent that states that such request is being made in response to an emergency or exigent circumstance), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not, and shall not permit any of its Subsidiaries, to:
(ia) amend the Organizational Documents of the Company Company, or any of its Subsidiaries (other than immaterial ministerial changes to the Organizational Documents of any of its Subsidiaries);
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliverdeliver any Company Securities, including, for the avoidance of doubt, any Company Securities or securities of any of the Subsidiaries of the CompanyEquity Awards, except (i) upon the settlement of Convertible Notes in accordance with the terms of any employment agreements or arrangements set forth on Schedule 5.2(c)(i) of the Convertible Notes Indentures; (ii) as required Company Disclosure Letter or any award agreements under the terms of any agreements Company Stock Plans or otherwise with respect to, and upon the vesting, exercise or settlement of, Company Options, Company RSUs or Company PSUs, in each case, in effect on the date of this Agreement, including any offer letters, employment agreements Agreement or award agreements, granted or upon entered into after the settlement date hereof in compliance with this Agreement as described in Section 5.2(g) of the Company RSUs or Disclosure Letter; and (ii) pursuant to the Company PSUs ESPP in accordance with its terms and Section 2.8(e) hereof, in each case, including with respect to the applicable terms; (iii) for satisfaction of Tax withholding and, with respect to the issuanceCompany Options, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary payment of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii)exercise price;
(ivd) except for transactions solely among the Company and its Subsidiaries or solely among the Subsidiaries of the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its Company Securities, other than (i) the acquisitions of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Options in order to pay the exercise price of such Company Options, (ii) the withholding of shares of Company Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company Options and the vesting and settlement of Company RSUs or Company PSUs, and (iii) the acquisition by the Company of Company Options, Company RSUs and Company PSUs in connection with the forfeiture of such awards, in each case in accordance with their terms;
(e) (i) adjust, split, combine or reclassify any shares of capital stock, or issue or authorize or propose the issuance of any other Company Securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or one of its other wholly wholly-owned Subsidiaries; (iii) modify the terms of any shares of its capital stock or other equity or voting interest, or (iiiv) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vif) (i) incur, assume assume, endorse, guarantee, or suffer otherwise become liable for any indebtedness Indebtedness for borrowed money or issue any debt securitiesmoney, except, in each case, for except (A) trade payables incurred borrowings in the ordinary course of business; business under the Company’s credit facilities as in effect on the date hereof for an amount up to $20 million, (B) loans guarantees or advances to direct credit support provided by the Company or indirect wholly owned any of its Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and any of its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, extent such Indebtedness is in accordance with its terms as in effect existence on the date of this Agreement or as set forth incurred in compliance with this Section 5.2(a)(vii5.2(f), (C) performance bonds and surety bonds entered into in the ordinary course of business, and (D) any Indebtedness among the Company Disclosure Letter, and its Subsidiaries or among the Company’s Subsidiaries;
(ag) (i) enter into, adopt, amend or modify in any material respect (including accelerating the vesting or payment), or terminate any Employee PlanPlan or make or grant any award under any Employee Plan (including any equity, other than in connection with routine, immaterial bonus or ministerial amendments to health and welfare plans that do not materially increase benefits or result in a material increase in administrative costsincentive compensation); (bii) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its SubsidiariesGroup; or (eiii) hire or engage or terminate (other than for cause or upon resignation“cause”) any director, officer, employee or other individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (ai), (bii) and (ciii), (A) in the ordinary course of business with respect to Persons eligible to earn an annual base salary or wages (or, in the case of non-employee service providers, equivalent compensation) of $200,000 or less; (B) to the extent required by applicable Law or pursuant to any Employee Plan in effect on the date of this Agreement and set forth on Schedule 3.18(a); (C) in conjunction with annual renewal or plan design changes for Employee Plans (other than severance or separation plans, bonus or other incentive plans or equity or equity-based awards, plans and agreements) that are made in the ordinary course new hires, promotions, changes of business and do not materially increase the cost to the Company and its Subsidiaries; or (D) any bonus payable with respect to the 2022 fiscal year in job position or status the ordinary course of any director, officer or employee who is not a member business consistent with past practice and in accordance with the terms of the Executive Group or any individual independent contractor with an annual cash fee bonus plan in effect as of less than three hundred thousand dollars ($300,000)the date of this Agreement and set forth on Schedule 3.18(a) and, in each case, as further modified by Section 5.2(g) of the Company Disclosure Letter;
(viiih) waivesettle, release release, waive or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle compromise any pending or threatened Legal Proceeding, except Proceeding other than (A) for the settlement of any Legal Proceeding that (i) is for solely monetary payments an amount of no more than two $1,000,000 individually or $5 million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose (provided no equitable relief has been sought or given), (B) any material non-monetary obligations on, settlement where the amount paid or restrictions against, or require an admission of liability by, to be paid by the Company or any of its Subsidiaries; Subsidiaries is covered by insurance coverage maintained by the Company or any of its Subsidiaries and (iiC) is settled settlements of any Legal Proceedings for an amount not in compliance with Section 6.12excess of 110% of the amount, if any, reflected or reserved in the balance sheet (or the notes thereto) of the Company;
(xi) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) ), or by any Governmental AuthorityAuthority or applicable Law;
(xij) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise settle any material Tax liability claim or any audit, examination or other proceeding relating to a material amount of Taxesassessment; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating assessment; file an amended Tax Return that could reasonably be expected to materially increase the Taxes payable by the Company or any of its SubsidiariesSubsidiaries unless required by Law; or (viii) request in writing enter into a closing agreement with any Governmental Authority regarding any material Tax ruling from any Governmental Authority, Tax;
(ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiik) incur or commit to incur any capital expenditures other than (i) consistent with(x) during fiscal year 2022, or with respect to any item set forth in the budget, amounts not more than ten percent (10%) in excess of the amount allocated in, 110% of the capital expenditure budget for such item for the fiscal year 20242022, set forth in Section 5.2(a)(xii5.2(k) of the Company Disclosure Letter (the “Capex Budget”) and (y) during fiscal year 2023 amounts not in excess of 110 % of the Capex Budget; or (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement;
(l) enter into, modify in any material respect, amend in any material respect or terminate (other than any Material Contract that has expired in accordance with its terms) any Material Contract except, in each case, in the ordinary course of business; provided, that any Material Contract (x) described by the definition set forth in Section 1.1(hhh)(iii) shall be exclusively governed by Section 5.2(b) and (y) described by the definition set forth in Section 1.1(hhh)(vi) shall be exclusively governed by Section 5.2(f);
(m) acquire any interest in any Person or any division, assets, properties, businesses or equity securities thereof (including by merger, consolidation or acquisition of stock or assets), other than (i) in or from any wholly owned Subsidiary of the Company, (ii) acquisitions of products and services in the ordinary course of business not pursuant to a merger, consolidation or acquisition of stock or assets or (iii) that do not exceed $5 million in the aggregate;
(n) sell, assign, transfer, or otherwise dispose of, any of the Company’s or its Subsidiaries’ material tangible assets, other than such sales, assignments, transfers or other dispositions that (i) sales of products and services or dispositions of tangible assets in the ordinary course of business or (ii) do not have a net book value or fair market value that exceeds $5 million individually or $10 million in the aggregate;
(o) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 (other than transactions entered into in the ordinary course of business on arms-length terms with portfolio companies affiliated with the Principal Stockholders);
(p) sell, assign, transfer, license, abandon, cancel, permit to lapse or enter the public domain, pledge, encumber or otherwise dispose of any material Company Owned Intellectual Property, other than (x) the grant of non-exclusive licenses in the ordinary course of business, or (y) pledges or encumbrances under the Company Credit Agreement as in effect on the date hereof;
(q) effectuate or announce any closing, employee layoff, furlough, reduction to terms and made available conditions of employment or other event affecting in whole or in part any site of employment, facility, operating unit or employee that would result in liability of the Company Group under WARN;
(r) make any loans, advances or capital contributions to, or investments in, any other Person, except for (i) extensions of credit to Parent prior customers in the ordinary course of business; (ii) advances to directors, officers and other employees for travel and other business-related expenses, in each case in the ordinary course of business and in compliance in all material respects with the Company Group’s policies related thereto; (iii) loans, advances or capital contributions to, or investments in, any direct or indirect wholly-owned Subsidiaries of the Company; and (iv) in amounts less than $1 million in the aggregate;
(s) enter into, amend or terminate any collective bargaining agreement or other labor agreement with a labor union, works council or similar labor organization;
(t) adopt or implement any stockholder rights plan or similar arrangement applicable to the date Transactions or any other transaction consummated pursuant to Parent’s rights under Section 5.3(d); or
(u) agree, resolve or commit to take any of the actions prohibited by this Agreement;Section 5.2.
Appears in 2 contracts
Samples: Merger Agreement (Datto Holding Corp.), Merger Agreement (Datto Holding Corp.)
Forbearance Covenants. (a) Except (A1) as expressly contemplated by this Agreement, (B2) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, (C3) as required by applicable Law Law, (4) as necessary or Orderadvisable in response to COVID-19 or any COVID-19 Measures in accordance with Section 5.1, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (D5) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayeddelayed and shall be deemed not given if Parent provides no written response within seven (7) Business Days after a written request by the Company for such consent), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, neither the Company shall not, and shall not permit nor any of its SubsidiariesSubsidiaries shall, nor, to the extent permitted by applicable Law and the terms of the Affiliated Practice Documents, shall the Company or its Subsidiaries permit the Affiliated Practices to:
(ia) amend the Organizational Documents of (i) the Company or Company, (ii) any of its SubsidiariesSubsidiaries and (iii) any Affiliated Practices, in the cases of clause (ii) and (iii), in any material respect;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganizationreorganization (other than the dissolution of any inactive Subsidiary of the Company);
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities any capital stock or other equity or voting interest of any of the Subsidiaries of the Companyits Subsidiaries, except (i) upon the settlement of Convertible Notes in accordance with the terms of any employment agreements or arrangements or any award agreements issued by the Convertible Notes Indentures; (ii) Company as required of the date of this Agreement under the terms of any agreements Company Stock Plan or otherwise with respect to, and upon the vesting, exercise or settlement of, Company Options, Company Restricted Stock or Company RSUs, in effect on the date of this Agreement or granted after the date hereof in compliance with this Agreement, including any offer letters, employment agreements ; (ii) as expressly contemplated by Section 5.2(g); or award agreements, or (iii) the delivery of Company Securities upon the settlement conversion of the Company RSUs or Company PSUs Convertible Notes in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii)Convertible Notes Indenture;
(ivd) except for transactions solely among the Company and its Subsidiaries or solely among the Subsidiaries of the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) the acquisitions of shares of Company Common Stock in connection with respect the surrender of shares of Company Common Stock by holders of Company Options to pay the Convertible Notes or Capped Calls; exercise price of such Company Options, (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company Options, the vesting of Company Restricted Stock and the vesting and settlement of Company RSUs or Company PSUs in accordance with their terms; or RSUs, (iii) the acquisition by the Company of Company Options, Company Restricted Stock and Company RSUs or Company PSUs in connection with the forfeiture of such awards awards, (iv) as required by any Employee Plan as in accordance with their termseffect on the date of this Agreement or amended after the date hereof as permitted pursuant to Section 5.2(g) and (v) pursuant to the Capped Call Transactions;
(ie) establish a record date for, declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect interest of the shares Company or its Subsidiaries (excluding, for the avoidance of capital stock or other equity or voting interestdoubt, the Company Convertible Notes), except for cash any dividends or other distributions made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vi) (if) incur, assume assume, endorse, guarantee, or suffer otherwise become liable for any indebtedness for borrowed money or issue any material obligation of another Person, including by way of a guarantee or an issuance or sale of debt securities, exceptor issue or sell options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, enter into any “keep well” or other Contract to maintain any financial statement or similar condition of another Person, or enter into any arrangement having the economic effect of any of the foregoing, except (i) borrowings under the Company Credit Agreement in each caseamounts available thereunder as of the date of this Agreement or under facilities that replace, for renew, extend, refinance or refund the Company Credit Agreement (including indebtedness incurred to repay or refinance related fees and expenses) provided, that (A) trade payables incurred no such replacement, renewal, extension, refinancing or refund shall increase the principal amount of such indebtedness that is the subject thereof, and (B) such refinanced indebtedness shall be on then prevailing market terms or on terms substantially consistent with or more beneficial to the Company and its Subsidiaries, taken as a whole, than the indebtedness being replaced, (ii) letters of credit, performance bonds and surety bonds entered into in the ordinary course of business; business consistent with past practice, (Biii) loans or advances to direct or indirect any indebtedness among the Company and its wholly owned Subsidiaries of or among the Company’s wholly owned Subsidiaries, and (iv) any additional indebtedness in an amount not to exceed (x) $225,000,000 minus (y) any amounts drawn under clause (i) hereof in the aggregate at any time incurred by the Company or any of its Subsidiaries; provided, that in each case, such indebtedness does not contain any terms or conditions that would prevent or hinder the Merger or other Transactions and only contains prepayment penalties that are consistent with market terms for such type of indebtedness;
(Cg) short-term debt incurred to fund operations (i) adopt, amend or modify in any material respect, or terminate any Employee Plan; or (ii) increase the compensation of any director, officer, employee or other Service Provider, except (A) in the business case of clause (i), (I) amendments and modifications, in the ordinary course of businessbusiness consistent with past practice and (II) entering into offer letters that contemplate “at will” employment in conjunction with new hires permitted by this Section 5.2 and (B) in the case of clause (ii), (I) to the extent required pursuant to any Employee Plan; (DII) obligations incurred pursuant to business credit cards in conjunction with annual renewal or plan design changes for the Employee Plans that are made in the ordinary course of business; business consistent with past practice and (E) do not materially increase the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect cost to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4III) capital contributions in conjunction with new hires, promotions and changes in job position or status of any current employee or other Service Provider who is both (x) not entitled to wholly owned Subsidiaries of earn an annual base salary or wage rate that equals or exceeds $275,000 and (y) terminable “at will”; provided that in the Company, in each case of clauses each of clause (1I) through (4III), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Lienssuch action is consistent with past practice;
(viih) except as required pursuant compromise or settle (or agree to the terms of compromise or settle) any Employee Plan threatened or Collective Bargaining Agreement, or any Contract relating thereto, actual Legal Proceeding other than (i) in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii5.2(h) of the Company Disclosure Letter, Letter and (aii) enter into, adopt, amend any compromise or modify in any material respect settlement where the amount paid or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of be paid by the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as excess of the date amounts set forth in Section 5.2(h) of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company Disclosure Letter is covered by insurance coverage maintained by the Company or any of its Subsidiaries; (d) take any action to accelerate the vestingprovided, lapsing of restrictions that, in each case, no such compromise or settlement involves non-monetary relief or any payment admissions of liability or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of responsibility by the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000)Affiliated Practice;
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting periodaccounting, except as required by GAAP, GAAP or Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority);
(xi) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise any material Tax liability or any audit, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiij) incur or commit to incur any capital expenditures other than during the years ended December 31, 2023 and December 31, 2024, in each case, amounts not in excess of 115% of the Company’s actual capital expenditure spend for the year ended December 31, 2022;
(i) other than in the ordinary course of business consistent withwith past practice and in each case, subject to the other clauses of this Section 5.2, materially modify or materially amend, waive, release, assign or settle any material rights, claims or benefits under, or with respect to any item set forth in the budget, not more terminate (other than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) of the Company Disclosure Letter and (ii) pursuant to obligations imposed by any Material Contract or Material Real Property Lease that has expired in effect as of the date of this Agreement and made available to Parent accordance with its terms) any Material Contract or Material Real Property Lease (including any Contract that would be deemed a Material Contract or Material Real Property Lease if it had been entered into prior to the date of this Agreement), (ii) other than as set forth on Section 5.2(k) of the Company Disclosure Letter or with respect to any Material Contract of the type listed in subclauses (i), (ii), (v), (vi), (viii), (ix), (xi), (xiii) and (xv) of Section 3.22(a), enter into any Contract that would have been a Material Contract had it been entered into prior to the date of this Agreement or (iii) enter into any Contract that would have been a Material Real Property Lease had it been entered into prior to the date of this Agreement, other than with respect to any Contract having an annual rental value of less than $400,000 entered into in the ordinary course of business consistent with past practice;
(l) license (other than non-exclusive licenses granted in the ordinary course of business), dedicate to the public, abandon, disclaim, sell, assign, transfer or encumber (other than Permitted Liens), or contribute as open source software, any material Owned Intellectual Property;
(m) make any loans or advances to any other Person, other than (i) to the Company or any of its Subsidiaries or Affiliated Practices in the ordinary course of business or (ii) accounts receivable and extensions of credit in the ordinary course of business and advances of expenses to employees, in the case of sub-clauses (i) and (ii), in the ordinary course of business consistent with past practice;
(n) adopt, enter into, engage in negotiations for, terminate or materially amend any collective bargaining agreement or other similar agreement with an employee representative body;
(o) enter into any new line of business outside of its existing business as of the date of this Agreement;
(p) enter into or adopt any “poison pill” or similar stockholder rights plan;
(q) acquire any division, assets, properties, businesses or equity securities in any Person (including by merger, amalgamation, plan of arrangement, consolidation or acquisition of securities or assets), other than (i) in or from any wholly owned Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Company, (ii) acquisition of products and services in the ordinary course of business consistent with past practice, (iii) that do not exceed $50,000,000 in the aggregate or (iv) capital expenditures as contemplated by Section 5.2(j);
(r) other than in the ordinary course of business consistent with past practice or as otherwise contemplated in Section 5.2(g), hire or terminate (other than for cause) the employment or service of any Service Provider who is entitled to earn an annual base salary or wage rate equal to or greater than $275,000 (or any individual who would be such a Service Provider if employed on the date hereof);
(s) sell, lease, encumber, dispose of or otherwise transfer any of the Company’s or its Subsidiaries’ assets (other than a sale, lease or transfer from the Company or a wholly owned Subsidiary of the Company to a wholly owned Subsidiary of the Company), securities, properties, interests or businesses if the aggregate amount of consideration paid or transferred to the Company and its Subsidiaries would exceed $50,000,000 in the aggregate, other than sales of Company products and services, inventory or used equipment in the ordinary course of business consistent with past practice;
(t) (i) change (or file a request to change) any material method of Tax accounting or any annual Tax accounting period, (ii) change any material Tax election of the Company or its Subsidiaries, (iii) settle or compromise any claim, investigation, audit or controversy relating to material Taxes in excess of the reserves established by the Company or its Subsidiaries for such claim, investigation, audit or controversy, (iv) file any amended income or other material Tax Return other than required by Law or (v) waive or agree to extend the statute of limitations with respect to any Tax Return other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business;
(u) agree, resolve or commit to take any of the actions prohibited by this Section 5.2. If any action taken or refrained from being taken by the Company or any of its Subsidiaries is expressly permitted or addressed by one sentence or subsection of this Section 5.2 and not prohibited thereunder, the taking or refraining from being taken of such action by the Company or any of its Subsidiaries shall be deemed not to be in violation of any other sentence or subsection of this Section 5.2.
Appears in 2 contracts
Samples: Merger Agreement (Oak Street Health, Inc.), Merger Agreement (CVS HEALTH Corp)
Forbearance Covenants. Except (a) Except (A) as expressly contemplated by this Agreement, (Bb) as set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter, (Cc) as required by applicable Law Law, (d) as necessary or Orderadvisable in response to COVID-19 and any COVID-19 Measures, or Contracts set forth in Sections 5.1 or 5.2 including to (A) protect the health and safety of the Company’s and its Subsidiaries’ employees, suppliers, partners and other individuals having business dealings with the Company Disclosure Letter and its Subsidiaries or (DB) respond to third-party supply or service disruptions caused by COVID-19 or any COVID-19 Measures or (e) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayeddelayed and shall be deemed given if Parent provides no written response within (x) five (5) Business Days after a written request by the Company for such consent or (y) one (1) Business Day after a written request by the Company for such consent that states that such request is being made in response to an emergency or exigent circumstance), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not, and shall not permit any of its Subsidiaries, to:
(ia) amend the Organizational Documents of the Company or amend in any material respect the Organizational Documents of its Subsidiariesany Subsidiaries of the Company;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities of any of the Subsidiaries of the CompanySecurities, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; any employment agreements or arrangements or (ii) as required any award agreements under the terms Company Stock Plans or otherwise with respect to, and upon the vesting, exercise or settlement of, Company Options, Company RSUs or Company PSUs, in each of any agreements the cases in clauses (i) and (ii), in effect on the date of this Agreement, including any offer letters, employment agreements Agreement or award agreements, granted after the date hereof in compliance with this Agreement or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii)6.11;
(ivd) except for transactions solely among the Company and its Subsidiaries or solely among the Subsidiaries of the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) the acquisitions of shares of Company Common Stock in connection with respect the surrender of shares of Company Common Stock by holders of Company Options in order to pay the Convertible Notes or Capped Calls; exercise price of such Company Options, (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company Options and the vesting and settlement of Company RSUs or Company PSUs in accordance with their terms; or PSUs, and (iii) the acquisition by the Company of Company Options, Company RSUs or and Company PSUs in connection with the forfeiture of such awards awards, in each case in accordance with their terms;
(e) (i) adjust, split, combine or reclassify any shares of capital stock, or issue or authorize or propose the issuance of any other Company Securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest; (ii) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or one of its other wholly wholly-owned Subsidiaries; or (iiiii) pledge or encumber (other than Permitted Liens not securing Indebtedness) modify the terms of any shares of its capital stock or other equity or voting interest; or (iv) pledge or encumber any shares of its capital stock or other equity or voting interest (other than to the extent required by the Company Credit Agreement in respect of any shares of capital stock issued after the date hereof in accordance with the terms of this Agreement; provided, that such encumbrances or pledges would not prevent, delay or impede the ability of such interests to be cancelled at the Effective Time);
(vif) (i) incur, assume assume, endorse, guarantee, or suffer otherwise become liable for any indebtedness for borrowed money or issue any debt securitiesmoney, except, in each case, for except (A) trade payables incurred revolving borrowings in the ordinary course of business; business under the Company’s credit facilities as in effect on the date hereof or under facilities that replace, renew, extend, refinance or refund such existing credit facilities (including indebtedness incurred to repay or refinance related fees and expenses), it being understood that Parent will be entitled to consent to any such new facility in accordance with Section 5.2(l) if such existing facility to which it relates constitutes a Material Contract hereunder, (B) loans guarantees or advances to direct credit support provided by the Company or indirect wholly owned any of its Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and any of its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, extent such indebtedness is in accordance with its terms as in effect existence on the date of this Agreement or as set forth incurred in compliance with this Section 5.2(a)(vii5.2(f), (C) performance bonds and surety bonds entered into in the ordinary course of business and (D) any indebtedness among the Company Disclosure Letter, and its Subsidiaries or among the Company’s Subsidiaries;
(ag) (i) enter into, adopt, amend or modify in any material respect (including accelerating the vesting or payment), or terminate any Employee Plan, other than in connection with routine, immaterial Plan or ministerial amendments to health and welfare plans that do not materially increase benefits make or result in a material increase in administrative costs; (b) increase the compensation or benefits of grant any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided award under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement(including any equity, bonus, or incentive compensation); (cii) grant materially increase the compensation of any director, officer or pay (or promise to grant or pay) any bonus employee or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its SubsidiariesCompany; or (eiii) hire or engage or terminate (other than for cause or upon resignation“cause”) any director, officer, employee or other individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (ai), (bii) and (ciii), (A) in the ordinary course of business with respect to Persons eligible to earn an annual base salary or wages (or, in the case of non-employee service providers, equivalent compensation) of $200,000 or less; (B) to the extent required by applicable Law or pursuant to any Employee Plan in effect on the date of this Agreement as set forth on Section 3.18(a) of the Company Disclosure Letter; (C) in conjunction with annual renewal or plan design changes for the Employee Plans (other than severance or separation plans, bonus or other incentive plans or equity or equity-based awards, plans and agreements) that are made in the ordinary course new hires, promotions, changes of business and do not materially increase the cost to the Company and its Subsidiaries; or (D) any bonus payable with respect to the 2022 fiscal year in job position or status the ordinary course of any director, officer or employee who is not a member business consistent with past practice and in accordance with the terms of the Executive Group or any individual independent contractor with an annual cash fee bonus plan in effect as of less than three hundred thousand dollars ($300,000)the date of this Agreement and set forth on Section 3.18(a) of the Company Disclosure Letter and, in each case, as further modified by Section 5.2(g) of the Company Disclosure Letter;
(viiih) settle, release, waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle compromise any pending or threatened Legal Proceeding, except Proceeding for an amount equal to or in excess of $1 million individually or $10 million in the aggregate other than (A) any settlement where the amount paid or to be paid by the Company or any of its Subsidiaries is covered by insurance coverage maintained by the Company or any of its Subsidiaries and (B) settlements of any Legal Proceeding that (i) is Proceedings for solely monetary payments an amount not materially in excess of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) the amount, if any, reflected or reserved in the aggregate and does not impose any material non-monetary obligations on, balance sheet (or restrictions against, or require an admission the notes thereto) of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12Company;
(xi) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) ), or by any Governmental AuthorityAuthority or applicable Law;
(xij) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise settle any material Tax liability claim or any audit, examination or other proceeding relating to a material amount of Taxesassessment; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating assessment; file an amended Tax Return that could reasonably be expected to materially increase the Taxes payable by the Company or any of its SubsidiariesSubsidiaries unless required by Law; or (viii) request in writing enter into a closing agreement with any Governmental Authority regarding any material Tax ruling from any Governmental Authority, Tax;
(ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiik) incur or commit to incur any capital expenditures other than (i) consistent with(x) during fiscal year 2022, or with respect to any item set forth in the budget, amounts not more than ten percent (10%) in excess of the amount allocated in, 120% of the capital expenditure budget for such item for the fiscal year 20242022, in accordance with the capital expenditure budget for fiscal years 2022 and 2023 set forth in Section 5.2(a)(xii5.2(k) of the Company Disclosure Letter (the “Capex Budget”) and (y) during fiscal year 2023, amounts not in excess of 130% of the Capex Budget for fiscal year 2023; or (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement;
(l) enter into, modify in any material respect, amend in any material respect or terminate (other than any Material Contract that has expired in accordance with its terms) any Material Contract except, in each case, in the ordinary course of business; provided, that any Material Contract (x) described by the definition set forth in Section 1.1(eee)(iii) shall be exclusively governed by Section 5.2(m) and (y) described by the definition set forth in Section 1.1(eee)(vi) shall be exclusively governed by Section 5.2(f);
(m) acquire any division, assets, properties, businesses or equity securities (or otherwise make any investment) in any Person (including by merger, consolidation or acquisition of stock or assets), other than (i) in or from any wholly owned Subsidiary of the Company, (ii) acquisitions of products and services in the ordinary course of business or (iii) that do not exceed $15 million in the aggregate;
(n) sell, assign, transfer, or otherwise dispose of, any of the Company’s or its Subsidiaries’ material assets, other than such sales, assignments, transfers or other dispositions that (i) are sales of products and services or dispositions of assets in the ordinary course of business or (ii) do not have a purchase price that exceeds $2.5 million individually or $5 million in the aggregate;
(o) sell, assign, transfer, license, abandon, cancel, permit to lapse or enter the public domain, pledge, encumber or otherwise dispose of any material Company Intellectual Property, other than (i) the grant of non-exclusive licenses, (ii) in the ordinary course of business or in a manner not inconsistent in any material respect with past practices, (iii) the expiration of Registered Intellectual Property at the end of their statutory term, or (iv) pledges or encumbrances under the Company Credit Agreement as in effect on the date hereof or any Permitted Lien;
(p) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;
(q) make any loans, advances or capital contributions to, any other Person, except for (i) extensions of credit to customers in the ordinary course of business; (ii) advances to directors, officers and made available to Parent prior other employees for travel and other business-related expenses, in each case in the ordinary course of business and in compliance in all material respects with the Company’s or its Subsidiaries’ policies related thereto; (iii) loans, advances or capital contributions to, any direct or indirect wholly owned Subsidiaries of the Company; and (iv) in amounts less than $250,000 in the aggregate outstanding at any given time; provided that, for the avoidance of doubt, nothing in this Section 5.2(q) shall restrict any acquisitions that are not prohibited by Section 5.2(m);
(r) effectuate or announce any closing, mass employee layoff, furlough or other event affecting in whole or in part any site of employment, facility or operating unit that would result in material liability to the date Company or its Subsidiaries under the Worker Adjustment and Retraining Notification Act of 1988 or any similar applicable Law;
(s) except as required by applicable Law, enter into, amend in any material respect, or terminate any collective bargaining agreement or other labor agreement with a labor union, works council, or similar labor organization; or
(t) agree, resolve or commit to take any of the actions prohibited by this Agreement;Section 5.2.
Appears in 1 contract
Forbearance Covenants. (a) Except (Aw) as expressly contemplated by this Agreement, Agreement and the consummation of the Merger and the transactions contemplated hereby; (Bx) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, ; (Cy) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter any COVID-19 Measures; or (Dz) as approved or requested in writing in advance (e-mail correspondence being sufficient) by Parent in writing (which approval shall will not be unreasonably withheld, conditioned or delayed), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article Article VIII and the Effective Time, the Company shall not, and shall not permit any cause each of its Subsidiaries, Subsidiaries as applicable not to:
(ia) amend the any Organizational Documents of the Company or any its Subsidiaries (other than immaterial amendments to the Organizational Documents of its Subsidiaries;
(ii) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iii) issue, sell or deliver, or agree or commit to issue, sell or deliver, any Company Securities or securities of any of the Subsidiaries of the Company, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company that would not and would not reasonably be expected to prevent, materially delay or materially impair the Company; or (iv) as consummation of the transactions contemplated by Section 5.2(a)(viihereunder);
(ivb) except for transactions solely among the Company and its wholly owned Subsidiaries or solely among the Company’s wholly owned Subsidiaries, directly issue, sell, deliver or indirectlyagree or commit to issue, reclassifysell or deliver (whether through the issuance or granting of options, splitwarrants, combinecommitments, subdivide or redeemsubscriptions, repurchase, rights to purchase or otherwise acquire otherwise) any Company Securities or amend the terms of, any of its capital stock securities or other equity or voting interestinterests of any of the Company’s Subsidiaries, other than except (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vi) (i) incur, assume or suffer any indebtedness for borrowed money or issue any debt securities, except, in each case, for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as agreements in effect on the date of this Agreement or as and set forth in on Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority;
(xi) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise any material Tax liability or any audit, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii5.2(b) of the Company Disclosure Letter and or (ii) pursuant to obligations imposed by any Material Contract issuances of Company Shares or Real Property Lease in effect other equity interests of the Company’s Subsidiaries upon exercise or settlement of Company Equity Awards outstanding as of the date of this Agreement and made available to Parent prior to the date of or issued in compliance with this AgreementSection 5.2;
Appears in 1 contract
Forbearance Covenants. (a) Except (A) as expressly contemplated or required by this Agreement, (B) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, (C) as required by applicable Law or OrderLaw, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (D) any COVID-19 Measures or (E) as approved or requested in advance by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayeddelayed and shall be deemed not provided if Parent provides no written response within seven (7) Business Days after a written request by the Company for such consent), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective TimeInterim Period, the Company shall not, and shall not permit any of its Subsidiaries, to:to (whether directly or indirectly):
(ia) amend or repeal the Organizational Documents of the Company or any of its Subsidiaries (other than immaterial changes to the Organizational Documents of any of its Subsidiaries);
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, conversion, division, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities of any of the Subsidiaries of the CompanySecurities, except (i) upon the vesting or settlement of, Company RSUs, Company MSUs or Company PSUs, in each case, outstanding on the date of Convertible Notes this Agreement in accordance with the their terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii)hereof;
(ivd) except for transactions solely among the Company and its wholly-owned Subsidiaries or solely among the wholly-owned Subsidiaries of the Company’s Subsidiaries, directly or indirectlyadjust, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy Tax obligations incurred in connection with the vesting and settlement of Company RSUs RSUs, Company MSUs or Company PSUs in accordance with their terms; or PSUs, and (iiiii) the acquisition by the Company of Company RSUs RSUs, Company MSUs or Company PSUs in connection with the forfeiture of such awards awards, in each case in accordance with their termsterms as in effect on the date of this Agreement;
(e) (i) declare, set aside or pay any dividend or other distribution including, for the avoidance of doubt, any distributions in accordance with Section 4.1(a)(1) of the Holdings LLC Agreement (in each case, whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock except for dividends or other equity or voting interest, except for cash dividends distributions made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; , (ii) modify the terms of any shares of capital stock or other equity or voting interest or (iiiii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vi) (if) incur, assume or suffer any indebtedness for borrowed money or issue any debt securitiesassume, exceptsettle, in each case, for prepay (A) trade payables incurred other than in the ordinary course of business; ) endorse, guarantee, or otherwise become liable for any Indebtedness for borrowed money, except (Bi) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business revolving borrowings in the ordinary course of business; business for working capital purposes under the Company’s credit facilities as in effect on the date hereof in a manner consistent with past practices, (Dii) guarantees or credit support provided by the Company or any of its Subsidiaries of the obligations of the Company or any of its Subsidiaries to the extent such Indebtedness is in existence on the date of this Agreement or incurred pursuant to business credit cards in compliance with this Section 5.2(f), (iii) performance bonds and surety bonds entered into in the ordinary course of business; business and (Eiv) the incurrence of indebtedness under any Indebtedness among the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly and its wholly-owned Subsidiaries of or among the Company; ’s wholly-owned Subsidiaries;
(iiig) make any loans, advances grant or capital contributions to, or investments inpermit to exist, any material Lien (other Person, except for (1than Permitted Liens) extensions on any assets or properties of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(viii) except as required pursuant to enter into, adopt, amend, modify (including accelerating the terms of vesting), or terminate any material Employee Plan or Collective Bargaining Agreement, (or any Contract relating theretoplan, in accordance with its terms as program, policy or agreement that would be a material Employee Plan if in effect on the date of this Agreement Agreement) or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in accelerate any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer officer, employee, non-employee service provider or employee individual independent contractor; or (ii) increase or change the benefits or compensation payable or paid, whether conditionally or otherwise, of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee employee, or individual independent contractor (other than any increase in annual base salary or annual wage rate and commensurate increases in target annual bonus opportunities adopted in the ordinary course of the Company business in respect of any non-officer employee or any of its Subsidiaries; (d) take any action individual service provider whose annual base salary or annual wage rate does not exceed $250,000 after giving effect to accelerate the vesting, lapsing of restrictions or any payment or benefitsuch increase), or the funding of pay or commit to pay any payment retention, stay, transaction or benefit, payable similar bonus or to become payable compensation to any current or former such director, officer, employee, non-employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee service provider or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (ai) or (ii), as applicable (bA) to the extent required by applicable Law or pursuant to any Employee Plan in effect on the date of this Agreement and set forth on the Company Disclosure Letter; (c), B) in conjunction with annual renewal or plan design changes for broad-based health and welfare Employee Plans that are made in the ordinary course new hiresof business and do not result in material additional cost to the Company; or (C) at-will offer letters (or, promotions, changes in job position or status of any director, officer or employee who is not a member for jurisdictions outside of the Executive Group United States, employment agreements that provide for employment periods or rights no greater than required by applicable Law) entered into with new hires in the ordinary course of business and whose annual base salary or annual wage rate is less than $250,000; provided that any such offer letter or employment agreement does not provide for severance payments (unless otherwise required by Law with respect to an employee located outside of the United States), notice periods in excess of thirty (30) days (unless otherwise required by Law with respect to an employee located outside of the United States), equity grants or any retention bonuses;
(i) hire or engage, or terminate (other than for cause) any employee or individual independent contractor with an annual cash fee base compensation in excess of less than three hundred thousand dollars ($300,000)250,000;
(viiij) waivenegotiate, release enter into, amend or amend extend any material restrictive covenant obligation of collective bargaining agreement or similar Contract with a Union or recognize or certify any current or former employee, independent contractor, officer or director Union as the bargaining representative for any employees of the Company or any of its Subsidiaries;
(ixk) settle implement any layoffs affecting, place on unpaid leave or furlough, or materially reduce the hours or weekly pay of, fifty (50) or more employees, or take any other action that would require notice under the federal Worker Adjustment and Retraining Notification Act or any similar foreign, state or local Law;
(l) settle, release, waive or compromise any pending or threatened Legal Proceeding, except Proceeding for an amount in excess of $2,000,000 individually or $5,000,000 in the aggregate other than (i) any settlement where the amount paid or to be paid by the Company or any of its Subsidiaries is covered by insurance coverage maintained by the Company or any of its Subsidiaries and (ii) settlements of any Legal Proceeding that (i) is Proceedings for solely monetary payments an amount not in excess of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) the amount, if any, reflected or reserved in the aggregate and does not impose any material non-monetary obligations on, balance sheet (or restrictions against, or require an admission the notes thereto) of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12Company;
(xm) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) ), or by any Governmental AuthorityAuthority or applicable Law;
(xin) other than where such action is required by Law, (iA) make, change or revoke any material Tax election; (iiB) settlechange any annual Tax accounting period or material method of Tax accounting, consent to (C) amend any material Tax Return, (D) settle or compromise any material Tax liability or any auditclaim related to Taxes for an amount materially in excess of amounts reserved, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (vE) enter into any “material closing agreement” within the meaning of Section 7121 of the Code agreement with respect to Taxes, or (or any analogous or similar provision of state, local or non-U.S. Law); (viF) surrender any right to claim a material Tax refund for material Taxes an amount materially in excess of amounts reserved;
(other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiio) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, as set forth in Section 5.2(a)(xii5.2(p) of the Company Disclosure Letter and Letter; or (ii) pursuant expenditures that do not exceed $1,000,000 individually or $5,000,000 in the aggregate;
(p) sell, assign, transfer, lease, license, encumber, abandon or permit to obligations imposed by lapse any Company Registered Intellectual Property or other material Company Intellectual Property, other than Permitted Liens or expirations of Registered Intellectual Property at the end of the applicable statutory term;
(q) enter into, or in any material respect, modify, amend or waive any rights under, or terminate (other than any Material Contract that has expired in accordance with its terms) any Material Contract except, in each case, in the ordinary course of business; provided that any Material Contract (x) described by the definition set forth in Section 1.1(qqq)(ii) shall be exclusively governed by Section 5.2(s) and (y) described by the definition set forth in Section 1.1(qqq)(v) shall be exclusively governed by Section 5.2(f);
(r) acquire any division, assets, properties, businesses or Real equity securities in (or otherwise make an investment in) any Person (including by merger, consolidation or acquisition of stock or assets), other than (i) in or from any Subsidiary of the Company (ii) assets in the ordinary course of business or (iii) that do not exceed $10,000,000 in the aggregate;
(i) sell, lease, transfer, abandon, exclusively license, assign or otherwise dispose of any real property, in each case other than in the ordinary course of business; or (ii) acquire any real property or interests therein (whether by purchase, lease or otherwise);
(t) sell, assign, transfer, or otherwise dispose of, any of the Company’s or its Subsidiaries’ material assets, other than Company Intellectual Property Lease and other than such sales, assignments, transfers or other dispositions that (i) are in effect the ordinary course of business or (ii) do not have a purchase price that exceeds $10,000,000 in the aggregate;
(u) make any loans, advances or capital contributions to, any other Person, except for (i) extensions of credit to customers in the ordinary course of business; (ii) advances to directors, officers and other employees for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance in all material respects with the Company’s or its Subsidiaries’ policies related thereto; (iii) loans, advances or capital contributions to, any direct or indirect wholly owned Subsidiaries of the Company; and (iv) if not otherwise covered by clauses (i), (ii) or (iii), in amounts less than $250,000 in the aggregate outstanding at any given time;
(v) amend, cancel, fail to renew, or renew for less coverage, any insurance policies of the Company or its Subsidiaries that are set forth on Section 5.2(v) of the Company Disclosure Letter;
(w) amend the terms of that certain Tax Receivable Agreement, dated as of July 27, 2021, by and among the date Company, Holdings and the other parties thereto, except as set forth in the TRA Amendment;
(x) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 (other than transactions entered into the ordinary course of business consistent with past practice on arms-length terms with portfolio companies affiliated with the Principal Stockholders); or
(y) agree, resolve or commit to take any of the actions prohibited by this Section 5.2. For purposes of this Agreement Section 5.2 (and made available to Parent prior the definitions contained herein), references to the date of this Agreement;Company and its Subsidiaries shall be deemed to include Severin Topco LLC.
Appears in 1 contract
Forbearance Covenants. Except (a) Except (A) as expressly contemplated permitted or required by this Agreement, (Bb) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, (Cc) as required by applicable Law or OrderLaw, or Contracts set forth (d) pursuant to and in Sections accordance with the second and third provisos of Section 5.1 or 5.2 of the Company Disclosure Letter or (De) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not, and shall not permit any of its Subsidiaries, to:
(ia) amend amend, modify, waive, rescind, change or otherwise restate the Organizational Documents of the Company or any Subsidiaries of its Subsidiariesthe Company;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities of any of the Subsidiaries of the CompanySecurities, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) and as required under by the terms of any agreements award agreement in effect as of the date hereof under the Company Stock Plans (or any award agreement entered into after the date hereof in accordance with Schedule 5.2(c)) or upon the vesting, exercise or settlement of, Company Options or Company RSUs, in each case in effect on the date of this Agreement, including any offer letters, employment agreements Agreement or award agreements, or upon granted following the settlement date of Company RSUs or Company PSUs this Agreement in accordance with the applicable terms; (iii) for the issuance, delivery or sale terms of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii)this Agreement;
(ivd) except for transactions solely among the Company and its wholly owned Subsidiaries or solely among the wholly owned Subsidiaries of the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) the acquisitions of shares of Company Common Stock in connection with respect the surrender of shares of Company Common Stock by holders of Company Options in order to pay the Convertible Notes or Capped Calls; exercise price of such Company Options, (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company Options and the vesting and settlement of Company RSUs or Company PSUs in accordance with their terms; or RSUs, and (iii) the acquisition by the Company of Company Options and Company RSUs or Company PSUs in connection with the forfeiture of such awards awards, in each case in accordance with their terms;
(e) (i) adjust, split, combine or reclassify any shares of capital stock, or issue or authorize or propose the issuance of any other Company Securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest; (ii) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or one of its other wholly wholly-owned Subsidiaries; (iii) modify the terms of any shares of its capital stock or other equity or voting interest; or (iiiv) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vi) (if) incur, assume assume, endorse, guarantee, or suffer otherwise become liable for any indebtedness for borrowed money money, issue or issue sell any debt securities, except, in each case, for securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries except (Ai) trade payables incurred performance bonds and surety bonds entered into in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; consistent with past practice and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between indebtedness among the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of or among the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens’s wholly owned Subsidiaries;
(viig) except as required pursuant to the terms of extent required by applicable Law or any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms existence as in effect on of the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letterhereof, (ai) enter into, adopt, establish, amend or modify in any material respect (including accelerating the vesting or payment), or terminate any Employee PlanPlan or make or grant any award under any Employee Plan (including any equity, other than in connection with routinebonus, immaterial or ministerial amendments to health and welfare plans that do not materially increase benefits or result in a material increase in administrative costsincentive compensation); (bii) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit payable to any current or former director, officer, employee or other individual independent contractor service provider of the Company or any of its Subsidiaries; (diii) take any action to accelerate the any payment, vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment compensation or benefitbenefits, payable payable, or to become payable payable, to any current or former director, officer, employee employee, or individual independent contractor service provider of the Company or any of its Subsidiaries; or (eiv) hire or engage hire, engage, or terminate (other than for cause or upon resignation“cause”) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an service provider whose annual cash fee of less than three hundred thousand dollars (compensation exceeds $300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000)150,000;
(viiih) settle, release, waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle compromise any pending or threatened Legal Proceeding, except Proceeding (x) for the settlement an amount equal to or in excess of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) 1,000,000 individually and ten million dollars (or $10,000,000) 3,000,000 in the aggregate and does not impose or (y) on a basis that would result in the imposition of any material non-monetary obligations onwrit, judgment, decree, settlement, agreement, award, injunction or restrictions against, similar order of any Governmental Authority that would restrict the future activity or require an admission conduct of liability byParent, the Company or any of their respective Subsidiaries or a finding or admission of a violation of Law or violation of the rights of any Person, other than with respect to monetary settlements only (i) where the amount paid or to be paid by the Company or any of its Subsidiaries; Subsidiaries is covered in full by insurance coverage maintained by the Company or any of its Subsidiaries or (ii) is settled of any Legal Proceedings for an amount not in compliance excess of the amount, if any, reflected or reserved expressly and specifically with Section 6.12respect to such Legal Proceedings in the balance sheet (or the notes thereto) of the Company;
(xi) materially change in any material respect the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) ), or by any Governmental AuthorityAuthority or applicable Law;
(xi) (ij) make, change or revoke any material Tax election; (ii) settle, consent to or compromise settle any material Tax liability claim or any audit, examination or other proceeding relating to a material amount of Taxesassessment; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a material refund for material Taxes (other than solely as a result of the passage of time)Taxes; (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating assessment; file an amended Tax Return that could reasonably be expected to materially increase the Taxes payable by the Company or any of its Subsidiaries; or (viii) request in writing enter into a closing agreement with any Governmental Authority regarding any material Tax ruling from any Governmental Authority, Tax;
(ixk) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiii) incur or commit to incur any capital expenditures other than (ix) consistent withduring fiscal year 2022, or with respect to any item set forth in the budget, amounts not more than ten percent (10%) in excess of the amount allocated in, 120% of the capital expenditure budget for such item for the fiscal year 20242022, in accordance with the capital expenditure budget for fiscal years 2022 and 2023 set forth in Section 5.2(a)(xii5.2(k) of the Company Disclosure Letter (the “Capex Budget”) and (y) during any quarter during fiscal year 2023, amounts not in excess of 120% of the applicable corresponding quarterly amounts set forth in the Capex Budget for fiscal year 2023; or (ii) pursuant fail to obligations imposed by incur or commit to any capital or research and development expenditures in the amounts and on the time frames set forth in the Capex Budget in all material respects;
(l) enter into, modify in any material respect, amend in any material respect or terminate (other than any Material Contract or Real Property Lease that has expired in effect as accordance with its terms in the ordinary course of business) any Material Contract (other than with respect to any Material Contract described by the definition set forth in Section 1.1(bbb)(iv) (and not in any other subsection of the date definition of Material Contract) in the ordinary course of business consistent with past practice) or otherwise waive, release or assign any material rights, claims or benefits of the Company or any of its Subsidiaries thereunder; provided, that any Material Contract (x) described by the definition set forth in Section 1.1(bbb)(iii) shall be exclusively governed by Section 5.2(m) and (y) described by the definition set forth in Section 1.1(bbb)(v) shall be exclusively governed by Section 5.2(f);
(m) acquire any division, assets, properties, businesses or equity securities (or otherwise make any investment) in any Person (including by merger, consolidation or acquisition of stock or assets), other than (i) in or from any wholly owned Subsidiary of the Company, (ii) acquisitions of products and services in the ordinary course of business or (iii) such acquisitions that do not exceed $1,000,000 individually or $3,000,000 in the aggregate;
(n) sell, assign, transfer, lease, pledge, cancel or otherwise dispose of, or permit or suffer to exist the creation of any Lien upon, any of the Company’s or its Subsidiaries’ assets, other than such sales, assignments, leases, pledges, transfers, cancellations or other dispositions that (i) are sales of products and services or dispositions of assets in the ordinary course of business consistent with past practice or (ii) do not have a purchase price that exceeds $1,000,000 individually or $3,000,000 in the aggregate;
(o) sell, assign, transfer, license, sublicense, abandon, cancel, permit to lapse or enter the public domain, pledge, encumber or otherwise dispose of any Company Intellectual Property, other than (i) the grant of non-exclusive licenses in the ordinary course of business to customers or suppliers on substantially the Company’s standard form of agreement (or an agreement with comparable intellectual property and confidentiality protections), (ii) disclosure of trade secrets pursuant to written confidentiality agreements or to recipients who are bound by professional or fiduciary obligations of non-disclosure, in each case, in the ordinary course of business, or (iii) the expiration of Registered Intellectual Property at the end of their statutory term;
(p) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;
(q) make any loans, advances or capital contributions to, any other Person, except for (i) extensions of credit to customers in the ordinary course of business consistent with past practice; (ii) advances to directors, officers and other employees for travel and other business-related expenses, in each case in the ordinary course of business and in compliance in all material respects with the Company’s or its Subsidiaries’ policies related thereto; and (iii) loans, advances or capital contributions to, any direct or indirect wholly owned Subsidiaries of the Company; provided that, for the avoidance of doubt, nothing in this Section 5.2(q) shall restrict any acquisitions that are not prohibited by Section 5.2(m);
(r) effectuate or announce any closing, employee layoff, employee furlough, plant closing or other employment action that would reasonably be expected to implicate the Worker Adjustment and Retraining Notification Act of 1988 or any similar applicable Law (collectively, the “WARN Act”);
(s) negotiate, enter into, amend in any material respect, or terminate any Labor Agreement and made available or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representative for any employees of the Company or its Subsidiaries;
(t) waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor; or (u) agree, resolve or commit to Parent prior to take any of the date of actions prohibited by this Agreement;Section 5.2.
Appears in 1 contract
Samples: Merger Agreement (Poshmark, Inc.)
Forbearance Covenants. (a) Except (A) as expressly contemplated by this Agreement, (Bi) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, ; (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Dii) as approved or requested by Parent in writing (which approval shall will not be unreasonably withheld, conditioned or delayed); (iii) for actions or omissions that constitute COVID-19 Measures (following reasonable prior consultation with Parent); (iv) as expressly contemplated by the terms of this Agreement; or (v) as required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company or any of its Subsidiaries, at all times during the period from commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall will not, and shall will not permit any of its SubsidiariesSubsidiaries (it being understood and agreed that the Company’s obligations with respect to the following, to the extent pertaining to the Specified JV Entities, shall be limited solely to its obligation not to, and to cause its Subsidiaries (other than the Specified JV Entities) not to, actively permit, authorize or consent to any of the following actions to be taken by any of the Specified JV Entities to the extent that the Company or such Subsidiary (other than the Specified JV Entities) has the right to permit, authorize or consent to such action), to:
(ia) amend or otherwise change the Organizational Documents of Charter, the Company Bylaws or any of its other similar organizational document, other than, with respect to the Company’s wholly owned Subsidiaries, any immaterial or ministerial amendments thereto;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iii) issue, sell or deliver, or agree or commit to issue, sell or deliver, any Company Securities or securities of any of the Subsidiaries of the Company, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii);
(iv) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, any of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vi) (i) incur, assume or suffer any indebtedness for borrowed money or issue any debt securities, except, in each case, for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority;
(xi) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise any material Tax liability or any audit, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) of the Company Disclosure Letter and (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement and made available to Parent prior to the date of this Agreement;
Appears in 1 contract
Forbearance Covenants. (a) Except (A) as expressly contemplated by this Agreement, (Bi) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, ; (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Dii) as approved or requested by Parent in writing (which approval shall will not be unreasonably withheld, conditioned or delayed); (iii) as expressly contemplated by the terms of this Agreement, (for the avoidance of doubt, excluding the proviso in Section 5.1), or (iv) as required by applicable law, at all times during the period from commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall will not, and shall will not permit any of its Subsidiaries, to:
(ia) amend the Organizational Documents of Charter, the Company Bylaws or any of its Subsidiariesother similar organizational document;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliverdeliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company Securities (or securities cash based on the value of any of the Subsidiaries of the CompanyCompany Securities), except (iA) upon for the settlement issuance or sale of Convertible Notes shares of Company Common Stock pursuant to Company Options, Company Stock-Settled Bonus Plan awards, Company RSUs or Company PSUs outstanding as of the Capitalization Date in accordance with the their terms as of the Convertible Notes Indenturesdate hereof or pursuant to the ESPP in accordance with its terms (as modified by Section 2.8(e) and Section 2.8(a)); (iiB) as required under the terms of any in connection with agreements in effect on the date hereof or otherwise permitted pursuant to Section 5.2(j); or (C) as contemplated by Section 5.2(j); provided, however, that the Company shall not (x) permit the acceleration of vesting, payment or funding under any Company Option, Company RSU, Company Stock-Settled Bonus Plan, or Company PSU other than as may be expressly required by the terms of the applicable Employee Plan, award or applicable resolutions of the Company Board adopted on the date of this AgreementAgreement (which have been furnished to Parent’s counsel), in each case as in effect on the date hereof or (y) if the Company has the right to settle any Employee Plan or employee benefit agreement, trust, plan, fund or other agreement (including with respect to any offer lettersCompany Option, employment agreements or award agreementsCompany Stock-Settled Bonus Plan, Company RSU, or upon Company PSU) in cash, settle such Employee Plan or employee benefit agreement, trust, plan, fund or other agreement in Company Securities instead of cash;
(d) directly or indirectly acquire, repurchase or redeem any securities, except for (A) repurchases, withholdings, or cancellations of Company Securities pursuant to the settlement terms and conditions of Company Options, Company Stock-Settled Bonus Plan awards, Company RSUs or Company PSUs outstanding as of the date hereof in accordance with their terms as of the date hereof (including acquisitions of shares of Company Common Stock tendered by holders of Company Options, Company Stock-Settled Bonus Plan awards, ESPP entitlements, Company RSUs or Company PSUs in accordance order to satisfy obligations to pay the exercise price and/or Tax withholding obligation with the applicable terms; respect thereto), or (iiiB) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of transactions between the Company to the Company; and any of its direct or (iv) as contemplated by Section 5.2(a)(vii)indirect Subsidiaries;
(ive) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify(A) adjust, split, combinecombine or reclassify any shares of capital stock, subdivide or redeem, repurchase, purchase issue or otherwise acquire authorize or amend propose the terms issuance of any other Company Securities in respect of, any in lieu of or in substitution for, shares of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(iB) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (iiC) pledge or encumber (other than Permitted Liens not securing Indebtedness) modify the terms of any shares of its capital stock or other equity or voting interest;
(vif) (iA) incur, assume or suffer any indebtedness for borrowed money Indebtedness (including any long-term or short-term debt) or issue any debt securities, except, in each case, except (1) for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D2) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E3) the incurrence of indebtedness under intercompany loans or advances between or among the Company Loan Agreement and/or its direct or indirect wholly-owned Subsidiaries; or (including as amended, substituted or replaced as permitted by this Agreement); (iiB) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; ;
(iiig) mortgage or pledge any of its and its Subsidiaries’ assets, tangible or intangible, or create or suffer to exist any lien thereupon (other than Permitted Liens), other than in connection with financing transactions permitted by Section 5.2(f) or consented to by Parent;
(h) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customerscustomers in the ordinary course of business; (2) advances to directors, officers and other employeesemployees for travel and other business-related expenses, in each case in the ordinary course of business and in compliance in all material respects with the Company’s policies related thereto; and (3) loans loans, advances or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in to, or to wholly investments in, direct or indirect wholly-owned Subsidiaries of the Company;
(i) lease, exclusively license, sell, abandon, transfer, assign, guarantee, or exchange any assets, tangible or intangible (including any Company Intellectual Property), in each case in excess of clauses $250,000 individually, other than (1) through (4)the sale, lease or licensing of products or services of the Company Group or other materials embodying Company Intellectual Property in the ordinary course of business; (2) the assignment or abandonment of immaterial Company Intellectual Property in connection with the exercise of the reasonable business judgment of the Company Group in the ordinary course of business; (iv3) mortgage the abandonment of trade secrets in the ordinary course of business consistent with reasonable business practices; and (4) any capital expenditures permitted by (or pledge any assets, tangible or intangible, or create or suffer consented to exist any lien thereupon, except for any Permitted Liensby Parent) under Section 5.2(n);
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (aA) enter into, adopt, amend (including accelerating the vesting, payment or funding or waiving any right of the Company Group with respect to), modify in any material respect or terminate any bonus, profit sharing, compensation, commission, severance, termination, option, restricted stock unit, appreciation right, performance unit, phantom equity, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other Employee PlanPlan or employee benefit agreement, trust, plan, fund or other than in connection with routinearrangement for the compensation, immaterial benefit or ministerial amendments to health and welfare plans that do not materially increase benefits or result in a material increase in administrative costs; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company Group in any manner; (B) materially increase the compensation of any director, officer, employee, individual consultant, former employee, individual independent contractor, or other individual service provider of the Company Group, pay any special bonus or special remuneration to any director, officer, employee, individual consultant, former employee, individual independent contractor, or other individual service provider of its Subsidiaries the Company Group, or pay any amount or provide any benefit not provided required by (or accelerate the time of payment or vesting of any payment becoming due under or waive any right of the Company Group with respect to) any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensationhereof, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, except in the case of each of clauses (aA) and (B), (b1) as may be required by applicable law or the terms of the applicable Employee Plan or award in effect as of the date hereof; (2) in connection with any new hires or any promotion of employees of the Company Group in the ordinary course of business and consistent with past practice; or (3) for increases in compensation for employees of the Company Group in the ordinary course of business and consistent with past practice (it being understood that these exceptions in the foregoing clauses (1), (2) and (c3) will not apply to any actions otherwise prohibited by the following sub-clause (C); or (C) enter into any change in control, severance or similar agreement or any retention or similar agreement with any officer, employee, director, individual independent contractor, individual consultant, or other individual service provider of the Company Group; provided, however, that the Company shall not permit the acceleration of vesting, payment or funding under any Employee Plan or employee benefit agreement, trust, plan, fund or other agreement (including with respect to any Company Option, Company RSU, or Company PSU) other than as may be expressly required by the terms of the applicable Employee Plan, award or applicable resolutions of the Company Board adopted on the date of this Agreement (which have been furnished to Parent’s counsel), in conjunction with ordinary course new hireseach case, promotions, changes in job position or status of any director, officer or employee who is not a member effect as of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000)date hereof;
(viiik) waivesettle, release release, waive or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle compromise any pending or threatened material Legal Proceeding, except for the settlement of any Legal Proceeding Proceedings that is (iA) is reflected or reserved against in the Audited Company Balance Sheet; (B) for solely monetary payments of no more than two million dollars ($2,000,000) 500,000 individually and ten million dollars ($10,000,000) 1,500,000 in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiariesaggregate; or (iiC) is settled in compliance with Section 6.126.15;
(xl) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by applicable law or GAAP, Regulation S(A) revalue in any material respect any of its properties or assets, including writing-X off notes or accounts receivable, other than in the ordinary course of the Exchange Act business; or (B) make any material change in any of its accounting principles or any interpretation thereof) or by any Governmental Authoritypractices;
(xiA) (i) makeother than in the ordinary course of business, make or change or revoke any material Tax election; (iiB) settle, consent to or compromise any material Tax liability claim or any audit, examination assessment or other proceeding relating surrender a right to a material amount of TaxesTax refund; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (viiC) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to assessment; (D) file an amended Tax Return that could materially increase the Taxes payable by the Company or any of its Subsidiaries; or (viiiE) request in writing enter into a closing agreement with any Governmental Authority regarding any material Tax ruling from any Governmental Authority, Tax;
(ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiin) incur or commit to incur any capital expenditure(s) to the extent that such capital expenditures exceed $200,000 individually or $500,000 in the aggregate (or $750,000 in the aggregate if the Termination Date is extended pursuant to the proviso in Section 8.1(c));
(o) enter into, modify, amend or agree to terminate any (a) Contract (other than any Material Contract) that if so entered into, modified, amended or terminated would have a Company Material Adverse Effect; or (ib) consistent Material Contract except in the ordinary course of business or as permitted under Section 5.2(c) and Section 5.2(j);
(p) maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice;
(q) engage in any transaction with, or with respect to enter into any item set forth in the budgetagreement, not more than ten percent (10%) in excess of the amount allocated inarrangement or understanding with, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) any Affiliate of the Company Disclosure Letter and (ii) or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to obligations imposed Item 404;
(r) enter into any Collective Bargaining Agreement or agreement to form a work council or other Contract with any labor organization or works council (except to the extent required by applicable law);
(s) grant any Material material refunds, credits, rebates or other allowances to any end user, customer, reseller or distributor, in each case other than in the ordinary course of business;
(t) effectuate a “plant closing”, “mass layoff” (each as defined in WARN) or other employee layoff event effecting in whole or in part any site of employment, facility, operating unit or employee;
(u) acquire (by merger, consolidation or acquisition of stock or assets) any other Person or any material equity interest therein or enter into any joint venture, legal partnership (excluding, for avoidance of doubt, strategic relationships, alliances, reseller agreements and similar commercial relationships), limited liability corporation or similar arrangement with any third Person; or
(v) enter into, authorize any of, or agree or commit to enter into a Contract or Real Property Lease in effect as to take any of the date of actions prohibited by this Agreement and made available to Parent prior to the date of this Agreement;Section 5.2.
Appears in 1 contract
Samples: Merger Agreement (Mobileiron, Inc.)
Forbearance Covenants. Except (a) Except (A) as expressly contemplated by this Agreement, (Bb) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, (Cc) as required by applicable Law or OrderLaw, or Contracts set forth (d) as necessary in Sections 5.1 or 5.2 response to COVID-19 Measures to protect the health and safety of the Company’s and its Subsidiaries’ employees, suppliers, customers, partners and other individuals having business dealings with the Company Disclosure Letter and its Subsidiaries (provided that, the Company has consulted with Parent and considered in good faith any recommendations of Parent) or (De) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed, and shall be deemed given if Parent provides no written response within seven Business Days after a written request by the Company for such consent), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not, and shall not permit any of its Subsidiaries, to:to (whether directly or indirectly and whether by merger, consolidation, division, conversion, operation of law or otherwise):
(ia) amend or repeal the Organizational Documents of the Company or any of its Subsidiaries (other than immaterial changes to the Organizational Documents of any of its Subsidiaries);
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, conversion, division, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities of any of the Subsidiaries of the CompanySecurities, except (i) with respect to, and upon the vesting, exercise or settlement of Convertible Notes of, in accordance with the terms of the Convertible Notes Indentures; (ii) as required applicable award agreements under the terms of any agreements Company Stock Plans, Company Options or Company RSUs, in effect each case, outstanding on the date of this Agreement or granted after the date hereof in compliance with this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii);
(ivd) except for transactions solely among the Company and its Subsidiaries or solely among the Subsidiaries of the Company’s Subsidiaries, directly or indirectlyadjust, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) the acquisitions of shares of Company Common Stock in connection with respect the surrender of shares of Company Common Stock by holders of Company Options to pay the Convertible Notes or Capped Calls; exercise price of such Company Options, (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company Options and the vesting and settlement of Company RSUs or Company PSUs in accordance with their terms; or RSUs, and (iii) the acquisition by the Company of Company Options and Company RSUs or Company PSUs in connection with the forfeiture of such awards awards, in each case in accordance with their terms;
(i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or one of its other wholly wholly-owned Subsidiaries, (ii) modify the terms of any shares of its capital stock or other equity or voting interest; or (iiiii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vif) incur, assume, endorse, guarantee, or otherwise become liable for any Indebtedness, except (i) incur, assume or suffer any indebtedness for borrowed money or issue any debt securities, except, in each case, for (A) trade payables incurred borrowings in the ordinary course of businessbusiness under the Company’s revolving credit facility as in effect on the date hereof or under facilities that replace, renew, extend, refinance or refund such existing revolving credit facility (including indebtedness incurred to repay or refinance related fees and expenses); it being understood that Parent will be entitled to consent to any such new facility in accordance with Section 5.2(m) if such existing facility to which it relates constitutes a Material Contract hereunder, (Bii) loans guarantees or advances to direct credit support provided by the Company or indirect wholly owned any of its Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and any of its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, extent such indebtedness is in accordance with its terms as in effect existence on the date of this Agreement or as set forth incurred in compliance with this Section 5.2(a)(vii5.2(f), (iii) performance bonds and surety bonds entered into in the ordinary course of business, and (iv) any indebtedness among the Company Disclosure Letter, and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries;
(ag) (i) enter into, adopt, amend or modify in any material respect or terminate any Employee PlanPlan (or any plan, agreement, program, policy or other than arrangement that would be an Employee Plan if in connection existence on the date hereof); (ii) increase the compensation of any employee, director, officer or other individual service provider of the Company or any of its Subsidiaries, except, in the case of each of clauses (i) and (ii), (A) to the extent required by applicable Law or pursuant to any Employee Plan in effect on the date of this Agreement; or (B) in conjunction with routine, immaterial annual renewal or ministerial amendments to health and welfare plans plan design changes for the Employee Plans; provided that such changes do not materially increase benefits or result in a material increase in administrative coststhe cost to the Company and its Subsidiaries; (biii) increase the compensation grant or provide any severance or termination payments or benefits of to any current or former employee, director, executive officer or employee other individual service provider of the Company or any of its Subsidiaries with a title of Vice President or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreementabove; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (div) take any action to accelerate the vesting, vesting or payment or lapsing of restrictions or any payment or benefitrestrictions, or fund or in any other way secure the funding payment, of compensation or benefits under any payment or benefit, payable or to become payable Employee Plan; (v) make any grants under the Company Stock Plans to any current or former employee, director, officer, employee officer or individual independent contractor service provider of the Company or any of its Subsidiaries; or (evi) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of grant to any current or former employee, independent contractordirector, officer or director individual service provider of the Company or any of its SubsidiariesSubsidiaries any right to reimbursement, indemnification or payment for any Taxes incurred under Section 409A or Section 4999 of the Code;
(ixh) settle settle, release, waive or compromise any pending or threatened Legal Proceeding, except Proceeding for an amount in excess of $2 million individually or $5 million in the aggregate other than (i) any settlement where the amount paid or to be paid by the Company or any of its Subsidiaries is covered by insurance coverage maintained by the Company or any of its Subsidiaries and (ii) settlements of any Legal Proceeding that (i) is Proceedings for solely monetary payments an amount not in excess of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) the amount, if any, reflected or reserved in the aggregate and does not impose any material non-monetary obligations on, balance sheet (or restrictions against, or require an admission the notes thereto) of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12Company;
(xi) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) ), or by any Governmental AuthorityAuthority or applicable Law;
(xij) make any material adverse change to the operation or security of any Company IT Assets or privacy policies of the Company or its Subsidiaries, except as required by applicable Law;
(i) makemake any material Tax election that is materially inconsistent with past practices or change or revoke any material Tax election except to the extent consistent with past practices, (ii) adopt, change or revoke any material Tax election; accounting period or method with respect to Taxes, unless otherwise required by applicable Law, (iiiii) settle, consent to or compromise file any amended material Tax liability or Return, (iv) enter into any audit, examination or other proceeding relating closing agreement with respect to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; , (v) enter into settle or compromise any “closing agreement” within the meaning of Section 7121 of the Code (proceeding with respect to any material Tax claim or any analogous or similar provision of stateassessment, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to material Taxes (other than automatic extensions or waivers of time to file income Tax Returns), (vii) surrender any right to claim a material Tax claim or assessment relating to the Company or any refund of its Subsidiaries; Taxes or (viii) request in writing or enter into any material Tax ruling from any with a Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations Authority with respect to a material amount of Taxes, provided, that clauses ;
(vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiil) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, amounts for fiscal year 2023 that are not more than ten percent (10%) in excess of 110% of the amount allocated in, amounts in the aggregate and for any individual quarter set forth on the capital expenditure budget for such item for the fiscal year 2024, 2023 set forth in Section 5.2(a)(xii5.2(l) of the Company Disclosure Letter (the “Capex Budget”);
(m) enter into, modify in any material respect, amend in any material respect or terminate (other than any Material Contract that has expired in accordance with its terms) any Material Contract except, in each case, in the ordinary course of business; provided that any Material Contract (i) described by the definition set forth in Section 1.1(ddd)(iii) shall be exclusively governed by Section 5.2(n) and (ii) described by the definition set forth in Section 1.1(ddd)(vi) shall be exclusively governed by Section 5.2(f);
(n) acquire any division, assets, properties, businesses or equity securities (or otherwise make any investment) in any Person (including by merger, consolidation or acquisition of stock or assets), other than (i) in or from any wholly-owned Subsidiary of the Company, (ii) assets in the ordinary course of business or (iii) that do not exceed $10 million in the aggregate;
(o) sell, assign, transfer, license, allow to lapse, abandon or otherwise dispose of any of the Company’s or its Subsidiaries’ assets, rights or properties (including material Company Intellectual Property), other than such sales, assignments, transfers or other dispositions (i) of non-exclusive licenses of Intellectual Property granted in the ordinary course of business or expirations of Company Registered Intellectual Property in accordance with its statutory terms, (ii) of sales of products and services or dispositions of assets in the ordinary course of business, (iii) that do not have a purchase price that exceeds $1.5 million individually or $3 million in the aggregate or (iv) solely between the Company and its wholly-owned Subsidiaries or solely between the Company’s wholly-owned Subsidiaries;
(p) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to obligations imposed by Item 404;
(q) make any Material Contract loans, advances or Real Property Lease capital contributions to, any other Person, except for (i) extensions of credit to customers in effect as the ordinary course of business; (ii) advances to directors, officers and other employees for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance in all material respects with the Company’s or its Subsidiaries’ policies related thereto; (iii) loans, advances or capital contributions to, any direct or indirect wholly owned Subsidiaries of the date Company; and (iv) if not otherwise covered by clauses (i), (ii) or (iii), in amounts less than $250,000 in the aggregate outstanding at any given time;
(r) hire or terminate (other than for cause) the employment or services of any employee, director, officer or individual service provider who is (or upon hire would be) with a title of Vice President or above, except as necessary in the ordinary course of business to replace a departing employee, director, officer, or individual service provider; provided the new hire is employed or retained for substantially the same role and for no more than 15% above the departing individual’s total target cash compensation; provided, further, that the aggregate dollar value of any such increases in excess of all the departing individuals’ total target cash compensation may not exceed $250,000; provided, further, that the Company shall take the actions set forth on Item 25 of Section 5.2 of the Company Disclosure Letter;
(s) effectuate or announce any plant closing or mass layoff which would trigger the notice requirements of the WARN Act;
(t) except as required by applicable Law, enter into, amend in any material respect or terminate any collective bargaining agreement or other written agreement with a labor union, works council or similar labor organization; or (u) agree, resolve or commit to take any of the actions prohibited by this Agreement and made available to Parent prior to the date of this Agreement;Section 5.2.
Appears in 1 contract
Forbearance Covenants. (a) Except (A) as expressly contemplated by this Agreement, (B) as set forth in Sections 5.1 or 5.2 of During the Company Disclosure Letter, (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (D) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective TimePre-Closing Period, the Company shall will not, and shall will not permit any of its Subsidiaries, to:Subsidiaries to (in each case subject to the Covenant Exceptions):
(ia) amend or otherwise change the Organizational Documents of Charter, the Company Bylaws or any of its Subsidiariesother similar organizational document;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, conversion, restructuring, recapitalization or other reorganization;
(iiic) (A) issue, sell sell, grant, transfer or deliver, or agree or commit to issue, sell sell, grant, transfer or deliver, any Company Securities of its capital stock, equity or voting interest or other securities (whether through the issuance or granting of any of the Subsidiaries of the Companyoptions, except restricted stock units, warrants, commitments, subscriptions, rights to purchase or otherwise), except, in each case, (i) upon for the settlement issuance, delivery or sale of Convertible Notes (or agreement or commitment to issue, sell or deliver) shares of Company Common Stock pursuant to Company Equity-Based Awards outstanding as of the date of this Agreement or pursuant to the ESPP, in each case in accordance with the their terms in effect as of the Convertible Notes Indenturesdate of this Agreement (as modified by this Agreement); provided, however, that the Company shall not (iix) accelerate of vesting, payment or funding under any Company Option or Company RSU other than as may be expressly required under by the terms of any agreements applicable Company Benefit Plan, award, agreement or applicable resolutions of the Company Board (or any committee thereof) adopted prior to the date of this Agreement, in each case as in effect on the date of this Agreement or (y) if the Company has the right to settle any material Company Benefit Plan or employee benefit agreement, trust, plan, fund or other agreement (including with respect to any Company Option or Company RSU) in cash pursuant to the express terms thereof, use reasonable best efforts to consult in good faith with Parent with respect to the settlement such Company Benefit Plan or employee benefit agreement, trust, plan, fund or other agreement in Company equity securities or in cash; (ii) upon the conversion of the Company Convertible Notes, the issuance of Company Class A Common Stock, cash or any combination of Company Class A Common Stock and cash pursuant to the terms of the Company Convertible Note Indentures in effect as of the date of this Agreement; (iii) in connection with a conversion of shares of Company Class B Common Stock into Company Class A Common Stock pursuant to the terms of the Charter; (iv) pursuant to agreements in effect as of the date of this Agreement, including the Company Convertible Notes Indentures and any employee offer lettersletters or similar agreements entered into or extended as of the date of this Agreement, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in each case in accordance with their terms in effect as of the applicable termsdate of this Agreement; (iiiv) to satisfy any obligations under the Company Convertible Notes; or (vi) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company; or (ivvii) as contemplated by Section 5.2(a)(vii5.2(i);
(ivd) except acquire, repurchase or redeem any of its capital stock, equity securities or voting interest or other securities or any rights, warrants or options to acquire any shares of its capital stock, equity or voting interest or other securities, except, in each case, (i) (A) as required pursuant to the terms and conditions of Company Equity-Based Awards outstanding as of the date of this Agreement in accordance with their terms as in effect as of the date of this Agreement or (B) to otherwise satisfy Tax obligations with respect to awards granted pursuant to Company Equity Plans or to pay the exercise price of Company Options, in each case in accordance with the terms of the applicable Company Equity Plan as in effect as of the date of this Agreement; (ii) in connection with a conversion of shares of Company Class B Common Stock into Company Class A Common Stock pursuant to the terms of the Charter; (iii) with respect to securities of wholly owned Subsidiaries of the Company, for transactions solely among between the Company and any of its wholly owned Subsidiaries or solely among any wholly owned Subsidiaries of the Company’s Subsidiaries, directly Company or indirectly, reclassify(iv) in connection with Company Capped Call Confirmations;
(e) (i) adjust, split, subdivide, combine, subdivide recapitalize or redeem, repurchase, purchase or otherwise acquire or amend the terms of, reclassify any of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Callsinterests; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(i) declare, accrue, set aside aside, establish a record date for, authorize or pay any dividend or other distribution (whether in cash, shares securities or property or any combination thereof) in respect of any shares of its capital stock or other equity or voting interestinterests or other securities, or make any other actual, constructive or deemed distribution in respect of the shares of its capital stock or other equity or voting interestinterests, except for cash dividends or other distributions made by any direct or indirect wholly wholly-owned Subsidiary of the Company to the Company or one of its other wholly wholly-owned Subsidiaries; or (iiiii) pledge or encumber any of its capital stock or other equity or voting interests (other than Permitted Liens not securing IndebtednessEncumbrances) of the capital stock or other equity or voting interest of the Company or, except for Permitted Encumbrances, of its Subsidiaries; (iv) modify the terms of any of its capital stock or other equity or voting interests; or (v) other than the Voting Agreements, enter into any agreement with respect to the voting of, or requiring the registration of, any shares of its capital stock or other equity or voting interestinterests or other securities;
(vif) acquire or agree to acquire (by merger, consolidation or acquisition of stock or assets) any third Person or any material equity interest in such Person, or enter into any material joint venture, legal partnership or similar arrangement with any third Person;
(g) acquire, or agree to acquire, fee ownership (or its jurisdictional equivalent) of any real property;
(h) (i) incur, incur or assume or suffer any indebtedness for borrowed money (including receivable financing arrangements) or issue any debt securities, except, in each case, for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of businessbusiness not in excess of $2,000,000 in the aggregate; (DB) for loans or advances between Subsidiaries of the Company or between the Company and its Subsidiaries; or (C) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other third Person, except with respect to obligations of direct the Company or indirect wholly owned Subsidiaries of the Companyits Subsidiaries; (iii) make any loans, advances or capital contributions to, or investments in, any other third Person, except except, in each case, for (1A) extensions of credit to customerscustomers in the ordinary course of business; (2B) advances to directors, officers and other employees, in each case in the ordinary course of business; and (3C) for loans or advances between wholly wholly-owned Subsidiaries of the Company or between the Company and its Subsidiaries; Subsidiaries and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage mortgage, pledge or pledge otherwise encumber any assets, tangible or intangible, or create any Encumbrance thereon (other than Permitted Encumbrances) or suffer (v) or amend, issue or sell any debt securities, instruments or warrants or other rights to exist acquire any lien thereupondebt securities of the Company or any of its Subsidiaries (including the Company Convertible Notes), except for guarantee any Permitted Liensdebt securities or instruments of another Person (other than pursuant to agreements or instruments in effect prior to the execution of this Agreement, including the Company Senior Notes Indenture), enter into any “keep well” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing;
(viii) except (i) in order to comply with applicable Law, (ii) as required pursuant to the terms of any Employee Company Benefit Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or (iii) as set forth provided in Section 5.2(a)(vii5.2(i) of the Company Disclosure Letter, (aA) establish, adopt, enter into, adopt, terminate or amend or modify in any material respect or terminate any Employee Plan, other than 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; Company Benefit Plan (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries plan, policy, agreement, Contract or pay any amount or provide any benefit not provided under any Employee arrangement that would be a Company Benefit Plan in accordance with its terms as if in effect as of on the date of this Agreement; (c) grant ), or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment compensation, or benefitbenefits under, payable any Company Benefit Plan (or to become payable any plan, policy, agreement, Contract or arrangement that would be a Company Benefit Plan if in effect on the date of this Agreement); (B) grant to any current Service Provider whose annual base cash compensation would (x) exceed $225,000 after such increase and (y) increase by more than 7% after such increase, any increase in cash compensation, bonus, incentive or former directormaterial fringe or other material benefits; (C) grant to any Service Provider any increase in change in control, officerretention, employee severance, stay bonus, tax gross-up, special remuneration, equity or individual independent contractor of the Company equity-based award, bonus or any of its Subsidiaries; or (e) hire or engage or terminate (termination pay, other than for cause payments made pursuant to agreements in effect on the date of this Agreement; (D) enter into any employment, consulting, change in control, retention, severance, stay bonus, tax gross-up, special remuneration, equity or upon resignation) equity-based award, bonus or termination agreement with any director, officer, employee or individual independent contractorService Provider, other than, than in the ordinary course of businessbusiness in connection with the hiring or engagement of new Service Providers whose annual base cash compensation does not exceed $225,000; (E) make or forgive any loans to any Service Provider (other than salary, any director, officer commission or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, other advances in the case ordinary course of each of clauses (abusiness consistent with past practice), or (bF) and (c)terminate any Service Provider whose annual base cash compensation exceeds $225,000, in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less other than three hundred thousand dollars ($300,000)terminations for cause;
(viiij) waiveenter into, release terminate or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its SubsidiariesLabor Agreement;
(ixk) settle settle, release, waive or compromise any pending or threatened material Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments involving payment by the Company (net of no more than two million dollars (any reasonably anticipated insurance proceeds) of $2,000,000) individually and ten million dollars (750,000 individually, or $10,000,000) 3,000,000 in the aggregate aggregate, and does not impose any for no material non-monetary obligations onrelief or (ii) settled in compliance with Section 6.15;
(l) commence any litigation or material Legal Proceeding other than (i) as a result of a Legal Proceeding commenced against an Acquired Company or (ii) any Legal Proceedings among the Parties or their respective Affiliates, or restrictions againstwith the parties to the Equity Commitment Letters or the Guarantees, or require an admission of liability byrelated to this Agreement, the Company Transaction Documents or the Merger;
(m) except as required by applicable Law or GAAP, (i) other than in the ordinary course of business, revalue in any material respect any of its Subsidiariesproperties or assets, including writing-off notes or accounts receivable; or (ii) is settled make any change in compliance with Section 6.12any of its accounting principles or practices;
(x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority;
(xin) (i) make, change or revoke any material Tax electionelection (other than periodic elections made in the ordinary course of business); (ii) settle, consent to adopt or change any material method of Tax accounting; (iii) settle or compromise any material Tax liability claim or assessment or surrender any audit, examination or other proceeding relating to claim for a material amount refund of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of as described in Section 7121 of the Code (or any analogous comparable or similar provision provisions of state, local applicable Laws) with respect to any material Taxes; (v) enter into or non-U.S. Law)initiate any voluntary disclosure agreements which could result in any material Tax liability; (vi) surrender amend, refile, modify or otherwise change any right to claim a refund for previously filed material Taxes (other than solely as a result of the passage of time)Tax Return; (vii) fail to pay any material Tax that becomes due and payable except to the extent such Tax is contested in good faith; or (viii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating (other than extensions obtained in the ordinary course of business);
(o) (i) incur, authorize or commit to incur any material capital expenditures other than (A) consistent in all material respects with the capital expenditure budget set forth in Section 5.2(o) of the Company Disclosure Letter; (B) pursuant to obligations imposed by Material Contracts or Leases; or (C) pursuant to agreements in effect prior to the date of this Agreement; (ii) modify, amend or terminate any Material Contract, or enter into any Contract that would be a Material Contract had it been in effect as of the date of the Agreement, in each case if such modification, amendment, termination or entry would, individually or in the aggregate, be materially adverse to the Acquired Companies, taken as a whole; (iii) maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice; (iv) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404; or (v) effectuate a “plant closing” or “mass layoff” (each as defined in the United States Worker Adjustment and Retraining Notification Act) affecting in whole or in part any site of employment, facility, operating unit or employee;
(p) except to the extent necessary to preserve enforceability of a Contract, in the ordinary course of business or as otherwise required by applicable Law, knowingly and affirmatively waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference or nondisparagement covenant of any Service Provider that is material to the Company;
(q) knowingly abandon, let lapse or cancel any material Company Registered Intellectual Property, except contemplated by Section 3.16(a) of the Company Disclosure Letter;
(r) disclose or abandon any material Trade Secrets, except in the ordinary course of business, or to the extent not economically desirable to maintain for the conduct of the business of the Company and its Subsidiaries, or disclose any source code for any Company Software to any Person except to a Service Provider or vendor obligated in writing to (i) maintain the confidentiality of, and not disclose, such source code; and (ii) use such source code only in the provision of services to the Company or any of its Subsidiaries; or ;
(viiis) request in writing make any material Tax ruling from change to the Company’s or any Governmental Authorityof its Subsidiaries’ policies or procedures with respect to their Processing of Personal Data, except to remediate any privacy or security issue to comply with applicable Privacy and Data Security Requirements (ix) file provided that in the case of Privacy and Data Security Requirements that consist of contractual obligations, any material Tax Returns inconsistent such contractual obligations entered into after the date of this Agreement must be entered into in accordance with past practice, (x) except the terms of this Agreement and in the ordinary course of business), agree to an extension or waiver of the statute of limitations with respect to as otherwise directed or required by a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority;
(t) adopt or implement any stockholder rights plan or similar arrangement; or
(xiiu) incur enter into, or agree or commit to incur enter into, a Contract to take any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in actions prohibited by this Section 5.2(a)(xii) of the Company Disclosure Letter and (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement and made available to Parent prior to the date of this Agreement;5.2.
Appears in 1 contract
Samples: Merger Agreement (Alteryx, Inc.)
Forbearance Covenants. (a) Except (Ai) as expressly contemplated permitted by this Agreement, (Bii) as set forth in Sections 5.1 or 5.2 Section 5.2 of the Company Disclosure Letter, (Ciii) as required by applicable Law or OrderLaw, including any COVID-19 Measures, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Div) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective TimePre-Closing Period, the Company shall not, and shall not permit any of its Subsidiaries, to:
(ia) amend the Organizational Documents of the Company or any of its SubsidiariesSubsidiaries (other than immaterial amendments to the Organizational Documents of any Subsidiary of the Company that would not and would not reasonably be expected to prevent, materially delay or materially impair the consummation of the Transactions);
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization;
(iii) issue, sell or deliver, or agree or commit to issue, sell or deliver, any Company Securities or securities of any of the Subsidiaries of the Company, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii);
(ivc) except for transactions solely among the Company and its wholly owned Subsidiaries or solely among the Company’s wholly owned Subsidiaries, directly issue, sell, deliver, pledge or indirectlyagree or commit to issue, sell, deliver, encumber or subject to a Lien, or pledge any Company Securities or Subsidiary Securities (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), including any Company Options or Company RSU Awards, except upon the exercise or settlement of, Company Options or Company RSU Awards, in each case, in accordance with their existing terms in effect on the date of this Agreement;
(d) except for transactions solely among the Company and its wholly owned Subsidiaries or solely among the Company’s wholly owned Subsidiaries, adjust, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock Company Securities or other equity or voting interestSubsidiary Securities, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy the exercise price or Tax obligations incurred in connection with the exercise or settlement of Company RSUs Options or Company PSUs RSU Awards, in each case, in accordance with their terms; existing terms as in effect on the date of this Agreement or (iiiii) the acquisition by the Company of shares of Company RSUs or Company PSUs Common Stock in connection with the forfeiture of such awards Company Options or Company RSU Awards, in each case, in accordance with their termsexisting terms in effect on the date of this Agreement;
(ie) enter into any new line of business outside the existing business of the Company and its Subsidiaries as of the date of this Agreement;
(f) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, Company Securities or Subsidiary Securities, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, Company Securities or Subsidiary Securities, except for cash dividends or distributions made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest;
(vig) (i) incur, assume or suffer any indebtedness for borrowed money or issue any debt securities, except, in each case, for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise), or suffer to exist any indebtedness for borrowed money (including any long-term or short-term debt) or issue any debt securities in excess of $1,000,000, except (A) for trade payables incurred in the obligations ordinary course of business; or (B) for intercompany loans, advances or capital contributions to, or investments in the Company or any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iiiii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) loans, advances to directorsor capital contributions to, officers and other employees; (3) loans or advances between investments in any direct or indirect wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries Subsidiary of the Company, in each case of clauses ; (1) through (4), in the ordinary course of business; or (iviii) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or create or suffer to exist any Lien thereupon, except for any Permitted Liens; (iv) amend, supplement or otherwise modify the Company Credit Agreement in any manner that would increase the cost to Parent, or otherwise impede the ability of Parent, to effectuate the Payoff and Release at Closing or (v) cancel any material indebtedness or material claim or intentionally waive any material claim or rights of the Company or any of its Subsidiaries;
(h) except as required by the terms of an Employee Plan in effect on the date of this Agreement in accordance with its existing terms, (i) enter into, adopt, amend, modify or terminate any Employee Plan (or any plan, program, policy, agreement or arrangement that would be an Employee Plan if in effect as of the date of this Agreement), other than de minimis administrative amendments in the ordinary course of business consistent with past practice to the Employee Plans that provide health or other welfare benefits that do not materially increase the cost or expense of maintaining, or increase the benefits payable under, such Employee Plans, (ii) increase the compensation, bonus, severance, termination pay or other benefits payable to any amount employee, officer, director or provide independent contractor, or pay any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; , (ciii) pay, grant or pay (award, or promise commit to pay, grant or payaward, any bonuses or incentive compensation (equity- or cash-based) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of (provided that the Company may pay annual cash bonuses with respect to the 2022 fiscal year pursuant to the Company Incentive Plan based on actual performance and determined in accordance with the terms and performance criteria set forth in the Company Incentive Plan as in effect for the 2022 fiscal year upon the earlier of (A) when bonuses in respect of such fiscal year would ordinarily be paid or (B) if the Company reasonably determines that the Effective Time will occur prior to the time that such bonuses would ordinarily be paid, at any of its Subsidiaries; time prior to the Effective Time, but in no event earlier than February 10, 2023), (div) take any action accelerate the vesting of, or otherwise deviate from the terms provided in the applicable award agreement with respect to accelerate the vesting, lapsing of restrictions payment, settlement or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of businessexercisability of, any director, officer Company RSU Award or employee who is not a member of the Executive Group Company Option or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a)other equity-based awards or other compensation, (bv) and (c)enter into any collective bargaining agreement or similar agreement or arrangement or recognize or certify any labor union, in conjunction with ordinary course new hires, promotions, changes in job position works council or status of other labor organization as the bargaining representative for any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director employees of the Company or its Subsidiaries, (vi) fund or provide any funding for any rabbi trust or similar arrangement, (vii) terminate the employment or services of any employee, independent contractor or consultant whose annual base salary or annual base fee is or would be in excess of $200,000 or, in the case of an employee, is at or above the level of Vice President or (viii) hire or engage any employee, independent contractor or consultant whose annual base salary or annual base fee is or would be in excess of $200,000 or, in the case of an employee, is or would be at or above the level of Vice President;
(ixi) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that against the Company or its Subsidiaries (i) that is for solely monetary payments of no more than two million dollars ($2,000,000) 100,000 individually and ten million dollars ($10,000,000) 250,000 in the aggregate and that does not impose any material non-monetary obligations or equitable relief on, or restrictions against, or require an the admission of liability wrongdoing by, the Company or its Subsidiaries; Subsidiaries or, after the Effective Time, Parent or its Subsidiaries or (ii) that is settled in compliance with Section 6.126.10;
(xj) materially change the Company’s or its Subsidiaries’ methods, procedures, principles or practices of financial accounting or annual accounting periodperiod or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, GAAP or Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority);
(xi) (ik) make, change or revoke any material Tax election; (ii) settleauthorize, consent to or compromise any material Tax liability or any audit, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of $200,000, individually or in the amount allocated inaggregate, other than consistent with the capital expenditure budget for such item for 2023 Company forecast and key initiatives document in the fiscal year 2024, set forth in Section 5.2(a)(xii) of the Company Disclosure Letter and (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement and made available to Parent prior to the date of this Agreement;Excel file entitled “Project Platinum Data Pack_11.
Appears in 1 contract
Forbearance Covenants. (a) Except (Aw) as expressly contemplated or permitted by this Agreement, (Bx) as set forth in Sections 5.1 or 5.2 Section 4.2 of the Company Disclosure LetterSchedule, (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Dy) as approved or requested in writing by Parent in writing (which approval shall will not be unreasonably withheld, conditioned delayed or delayedconditioned), or (z) as required by law, at all times during the period from commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII VII and the Effective Time, the Company shall not, not do any of the following and shall not permit any of its SubsidiariesSubsidiaries to do any of the following (it being understood and hereby agreed that if any action is expressly permitted by any of the following subsections, to:such action shall be expressly permitted under Section 4.1 also):
(ia) amend the Organizational Documents amend, waive or otherwise modify its certificate of the Company incorporation or any of its Subsidiariesbylaws or comparable organizational documents;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganizationreorganization of the Company or any of its operating Subsidiaries;
(iiic) issue, sell or sell, deliver, grant or agree or authorize, propose or commit to issue, sell sell, deliver or delivergrant (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company Securities or securities of any of the Subsidiaries of the CompanySubsidiary Securities, except for (i) upon the settlement issuance and sale of Convertible Notes in accordance with shares of Company Common Stock pursuant to the terms exercise of Company Options or Company Warrants outstanding prior to the Convertible Notes Indentures; date hereof or (ii) the granting of Company Options, not to exceed an aggregate of 100,000 (one hundred thousand) Company Options, that will each be settled at the Effective Time in the manner set forth in Section 1.7(d)(ii), which in each case will have an exercise price equal to or in excess of the Per Share Price (as required under adjusted pursuant to Section 1.7(b), in connection with any new non-officer employee hires or the terms promotion of any agreements non-officer employees consistent in effect on amount with past practices or guidelines established prior to the negotiation of the transactions contemplated hereby, and with respect to other terms, including vesting, consistent with past practice;
(d) directly or indirectly acquire, repurchase or redeem any Company Securities or Subsidiary Securities (other than the withholding of shares of Company Common Stock in connection with the vesting of Company Options, Company Warrants or Company Restricted Shares outstanding as of the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii);
(ive) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify(i) adjust, split, combinecombine or reclassify any Company Securities or Subsidiary Securities, subdivide or redeem, repurchase, purchase issue or otherwise acquire authorize or amend propose the terms issuance of any other securities in respect of, any in lieu of its capital stock or other equity in substitution for, Company Securities or voting interest, other than (i) with respect to the Convertible Notes or Capped CallsSubsidiary Securities; (ii) the withholding declare, set any record dates or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(i) declarepayment dates for, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock Company Securities or other equity or voting interestSubsidiary Securities, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock Company Securities or other equity or voting interestSubsidiary Securities, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (iiiii) pledge or encumber any Company Securities or Subsidiary Securities; or (other than Permitted Liens not securing Indebtednessiv) modify the terms of any shares of its capital stock Company Securities or other equity or voting interestSubsidiary Securities;
(vif) (i) incur, create, assume or suffer any indebtedness otherwise become liable for borrowed money or issue any debt securitiesIndebtedness, except, in each case, for other than (A) as permitted by clause (i) of Section 4.2(h), (B) for an aggregate liability that will not exceed $5,000,000 (five million dollars), (C) under revolving credit facilities in effect on the date hereof and disclosed to Parent, or (D) in connection with trade payables incurred in the ordinary course of business; (B) business or loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement)Subsidiaries; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, to or investments in, in any other Person, except for (1) extensions of credit to customers; (2) expense and travel advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer business consistent with past practice to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor employees of the Company or any of its Subsidiaries; or (eiv) hire sell, mortgage, lease, transfer, encumber, license, abandon, pledge or engage otherwise dispose of any of its or its Subsidiaries’ material assets, tangible or intangible, other than dark fiber sales in the ordinary course of business, or create or suffer to exist any Lien thereupon (other than Permitted Liens) including by merger, consolidation, asset sale or other business combination, other than any Liens incurred in connection with transactions permitted by clause (i) of Section 4.2(f); or (v) cancel, release or assign any material indebtedness or claims;
(g) (i) enter into, adopt, create, amend (including acceleration of vesting), modify or terminate any bonus, profit sharing, compensation, severance, termination, option, appreciation right, performance unit, incentive, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the compensation, benefit or welfare of any director, officer or employee in any manner, except in any such case (other than with respect to severance) (A) as may be required by applicable law, (B) with respect to employees, other than officers of the Company, increases in salary in the ordinary course of business and consistent with past practice or (C) in the ordinary course of business and consistent with past practice in connection with any new non-officer employee hires or the promotion of any non-officer employees; or (ii) increase the compensation of any director, officer or employee, pay any severance, special bonus or special remuneration to any director, officer or employee, or pay any benefit not required by any plan or arrangement as in effect as of the date hereof, except in any such case (X) as may be required by applicable law or (Y) in the ordinary course of business and consistent with past practice in connection with any new non-officer employee hires or the promotion of any non-officers employees;
(h) (i) incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith that individually or in the aggregate, are in excess of $5,000,000 (five million dollars), except (A) as included in the Company’s capital expenditure budget furnished to Parent prior to the date hereof, (B) as incurred in the ordinary course of business consistent with past practice or (C) in respect of the repair or replacement of the current assets or properties of the Company or any of its Subsidiaries (consistent with past practices of the Company and its Subsidiaries); (ii) pay, discharge, settle or satisfy any liabilities, other than the payment, discharge or satisfaction of liabilities in the ordinary course of business, consistent with past practice, as required by any applicable law, as accrued for in the Audited Company Balance Sheet or as required by the terms of any Contract of the Company or its Subsidiaries, as in effect on the date of this Agreement or entered into in compliance with the terms of this Agreement; (iii) enter into, modify, amend or terminate (other than for cause or upon resignationx) any directorContract which if so entered into, officermodified, employee amended or individual independent contractor, other than, terminated would have a Company Material Adverse Effect or (y) except in the ordinary course of business, any directorMaterial Contract; or (iv) engage in any transaction with, officer or employee who is not a member of the Executive Group enter into any agreement, arrangement or understanding with any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director Affiliate of the Company or its Subsidiariesother Person covered by Item 404 of Regulation S-K promulgated under the Exchange Act that would be required to be disclosed under such Item 404 other than those in existence on the date of this Agreement;
(ixi) compromise or settle any pending or threatened material Legal Proceeding, Proceeding having a value or in an amount not covered by insurance in excess of $1,000,000 (one million dollars);
(j) except for the settlement as may be required by applicable law or by GAAP (including as a result of any Legal Proceeding change in law or GAAP that becomes effective after the date of this Agreement), make any change in any of the accounting methods or principles used by it;
(i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any change its material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ Tax accounting methods, principles or practices of financial accounting or annual accounting periodpractices, except as required by GAAP, Regulation S-X of the Exchange Act GAAP or applicable law; (ii) make or any interpretation thereof) or by any Governmental Authority;
(xi) (i) make, change or revoke any material Tax election; (iiiii) settle, consent to settle or compromise any material Tax liability or any auditU.S. federal, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law)Tax liability; (viiv) surrender fail to file any right to claim a refund for material Taxes Tax Return when due (other than solely as a result taking into account lawful extensions of the passage of time)due date for any Tax Return) or fail to cause such Tax Returns when filed to be complete and accurate in all material respects; or (viiv) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to for material Taxes;
(l) acquire (including by merger, consolidation or acquisition of stock or assets) any other business, material property or assets thereof or any material equity interest therein in excess of $10,000,000 (ten million dollars) in the aggregate; provided that the Company shall not, and shall not permit its Subsidiaries to, acquire any such business, material property or assets from any Affiliate (including any director or officer or any Affiliate thereof) of the Company;
(m) implement any employee layoffs that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar or related state or local law, regulation, or ordinance, or enter into any collective bargaining agreement;
(n) enter into a material line of business outside of its Subsidiaries; or existing business;
(viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (xo) except as required by applicable law or in the ordinary course of businessbusiness consistent with past practice (including as contemplated by the Company’s 2012 operating plan), (i) launch any new programming or other service, (ii) change the rates charged the Company and its Subsidiaries for any class of service or any other existing customer charges (including entering into customer billing services agreements providing for launch incentives or free coverage periods), or (iii) institute any new charges or add or delete or change the mix or channel positions of any programming services; or
(p) agree to an extension or waiver take any of the statute actions described in this Section 4.2. The parties hereto acknowledge and hereby agree that the restrictions set forth in this Section 4.2 and elsewhere in this Agreement are not intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or its Subsidiaries at any time prior to the Effective Time, and notwithstanding anything to the contrary set forth in this Agreement, no consent of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically Parent or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or Merger Sub will be required with respect to any item matter set forth in this Agreement to the budget, not more than ten percent (10%) in excess extent the requirement of such consent would violate any applicable law. Prior to the amount allocated inEffective Time, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) of the Company Disclosure Letter and its Subsidiaries shall exercise (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement consistent with and made available to Parent prior subject to the date terms, conditions and restrictions of this Agreement;) control and supervision over their own business and operations.
Appears in 1 contract
Samples: Merger Agreement (Knology Inc)
Forbearance Covenants. (a) Except (Aw) as expressly contemplated or permitted by this Agreement, (Bx) as set forth in Sections 5.1 or 5.2 Section 4.2 of the Company Disclosure LetterSchedule, (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Dy) as approved or requested in writing by Parent in writing (which approval shall will not be unreasonably withheld, conditioned delayed or delayedconditioned), or (z) as required by law, at all times during the period from commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII VII and the Effective Time, the Company shall not, not do any of the following and shall not permit any of its SubsidiariesSubsidiaries to do any of the following (it being understood and hereby agreed that if any action is expressly permitted by any of the following subsections, to:such action shall be expressly permitted under Section 4.1 also):
(ia) amend the Organizational Documents amend, waive or otherwise modify its certificate of the Company incorporation or any of its Subsidiariesbylaws or comparable organizational documents;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganizationreorganization of the Company or any of its operating Subsidiaries;
(iiic) issue, sell or sell, deliver, grant or agree or authorize, propose or commit to issue, sell sell, deliver or delivergrant (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company Securities or securities of any of the Subsidiaries of the CompanySubsidiary Securities, except for (i) upon the settlement issuance and sale of Convertible Notes in accordance with shares of Company Common Stock pursuant to the terms exercise of Company Options or Company Warrants outstanding prior to the Convertible Notes Indentures; date hereof or (ii) the granting of Company Options, not to exceed an aggregate of 100,000 (one hundred thousand) Company Options, that will each be settled at the Effective Time in the manner set forth in Section 1.7(d)(ii), which in each case will have an exercise price equal to or in excess of the Per Share Price (as required under adjusted pursuant to Section 1.7(b), in connection with any new non-officer employee hires or the terms promotion of any agreements non-officer employees consistent in effect on amount with past practices or guidelines established prior to the negotiation of the transactions contemplated hereby, and with respect to other terms, including vesting, consistent with past practice;
(d) directly or indirectly acquire, repurchase or redeem any Company Securities or Subsidiary Securities (other than the withholding of shares of Company Common Stock in connection with the vesting of Company Options, Company Warrants or Company Restricted Shares outstanding as of the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii);
(ive) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify(i) adjust, split, combinecombine or reclassify any Company Securities or Subsidiary Securities, subdivide or redeem, repurchase, purchase issue or otherwise acquire authorize or amend propose the terms issuance of any other securities in respect of, any in lieu of its capital stock or other equity in substitution for, Company Securities or voting interest, other than (i) with respect to the Convertible Notes or Capped CallsSubsidiary Securities; (ii) the withholding declare, set any record dates or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(i) declarepayment dates for, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock Company Securities or other equity or voting interestSubsidiary Securities, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock Company Securities or other equity or voting interestSubsidiary Securities, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; or (iiiii) pledge or encumber any Company Securities or Subsidiary Securities; or (other than Permitted Liens not securing Indebtednessiv) modify the terms of any shares of its capital stock Company Securities or other equity or voting interestSubsidiary Securities;
(vif) (i) incur, create, assume or suffer any indebtedness otherwise become liable for borrowed money or issue any debt securitiesIndebtedness, except, in each case, for other than (A) as permitted by clause (i) of Section 4.2(h), (B) for an aggregate liability that will not exceed $5,000,000 (five million dollars), (C) under revolving credit facilities in effect on the date hereof and disclosed to Parent, or (D) in connection with trade payables incurred in the ordinary course of business; (B) business or loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted or replaced as permitted by this Agreement)Subsidiaries; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, to or investments in, in any other Person, except for (1) extensions of credit to customers; (2) expense and travel advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer business consistent with past practice to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor employees of the Company or any of its Subsidiaries; or (eiv) hire sell, mortgage, lease, transfer, encumber, license, abandon, pledge or engage otherwise dispose of any of its or its Subsidiaries’ material assets, tangible or intangible, other than dark fiber sales in the ordinary course of business, or create or suffer to exist any Lien thereupon (other than Permitted Liens) including by merger, consolidation, asset sale or other business combination, other than any Liens incurred in connection with transactions permitted by clause (i) of Section 4.2(f); or (v) cancel, release or assign any material indebtedness or claims;
(g) (i) enter into, adopt, create, amend (including acceleration of vesting), modify or terminate any bonus, profit sharing, compensation, severance, termination, option, appreciation right, performance unit, incentive, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the compensation, benefit or welfare of any director, officer or employee in any manner, except in any such case (other than with respect to severance) (A) as may be required by applicable law, (B) with respect to employees, other than officers of the Company, increases in salary in the ordinary course of business and consistent with past practice or (C) in the ordinary course of business and consistent with past practice in connection with any new non-officer employee hires or the promotion of any non-officer employees; or (ii) increase the compensation of any director, officer or employee, pay any severance, special bonus or special remuneration to any director, officer or employee, or pay any benefit not required by any plan or arrangement as in effect as of the date hereof, except in any such case (X) as may be required by applicable law or (Y) in the ordinary course of business and consistent with past practice in connection with any new non-officer employee hires or the promotion of any non-officers employees;
(i) incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith that individually or in the aggregate, are in excess of $5,000,000 (five million dollars), except (A) as included in the Company’s capital expenditure budget furnished to Parent prior to the date hereof, (B) as incurred in the ordinary course of business consistent with past practice or (C) in respect of the repair or replacement of the current assets or properties of the Company or any of its Subsidiaries (consistent with past practices of the Company and its Subsidiaries); (ii) pay, discharge, settle or satisfy any liabilities, other than the payment, discharge or satisfaction of liabilities in the ordinary course of business, consistent with past practice, as required by any applicable law, as accrued for in the Audited Company Balance Sheet or as required by the terms of any Contract of the Company or its Subsidiaries, as in effect on the date of this Agreement or entered into in compliance with the terms of this Agreement; (iii) enter into, modify, amend or terminate (other than for cause or upon resignationx) any directorContract which if so entered into, officermodified, employee amended or individual independent contractor, other than, terminated would have a Company Material Adverse Effect or (y) except in the ordinary course of business, any directorMaterial Contract; or (iv) engage in any transaction with, officer or employee who is not a member of the Executive Group enter into any agreement, arrangement or understanding with any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director Affiliate of the Company or its Subsidiariesother Person covered by Item 404 of Regulation S-K promulgated under the Exchange Act that would be required to be disclosed under such Item 404 other than those in existence on the date of this Agreement;
(ixi) compromise or settle any pending or threatened material Legal Proceeding, Proceeding having a value or in an amount not covered by insurance in excess of $1,000,000 (one million dollars);
(j) except for the settlement as may be required by applicable law or by GAAP (including as a result of any Legal Proceeding change in law or GAAP that becomes effective after the date of this Agreement), make any change in any of the accounting methods or principles used by it;
(i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any change its material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ Tax accounting methods, principles or practices of financial accounting or annual accounting periodpractices, except as required by GAAP, Regulation S-X of the Exchange Act GAAP or applicable law; (ii) make or any interpretation thereof) or by any Governmental Authority;
(xi) (i) make, change or revoke any material Tax election; (iiiii) settle, consent to settle or compromise any material Tax liability or any auditU.S. federal, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law)Tax liability; (viiv) surrender fail to file any right to claim a refund for material Taxes Tax Return when due (other than solely as a result taking into account lawful extensions of the passage of time)due date for any Tax Return) or fail to cause such Tax Returns when filed to be complete and accurate in all material respects; or (viiv) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to for material Taxes;
(l) acquire (including by merger, consolidation or acquisition of stock or assets) any other business, material property or assets thereof or any material equity interest therein in excess of $10,000,000 (ten million dollars) in the aggregate; provided that the Company shall not, and shall not permit its Subsidiaries to, acquire any such business, material property or assets from any Affiliate (including any director or officer or any Affiliate thereof) of the Company;
(m) implement any employee layoffs that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar or related state or local law, regulation, or ordinance, or enter into any collective bargaining agreement;
(n) enter into a material line of business outside of its Subsidiaries; or existing business;
(viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (xo) except as required by applicable law or in the ordinary course of businessbusiness consistent with past practice (including as contemplated by the Company’s 2012 operating plan), (i) launch any new programming or other service, (ii) change the rates charged the Company and its Subsidiaries for any class of service or any other existing customer charges (including entering into customer billing services agreements providing for launch incentives or free coverage periods), or (iii) institute any new charges or add or delete or change the mix or channel positions of any programming services; or
(p) agree to an extension or waiver take any of the statute actions described in this Section 4.2. The parties hereto acknowledge and hereby agree that the restrictions set forth in this Section 4.2 and elsewhere in this Agreement are not intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or its Subsidiaries at any time prior to the Effective Time, and notwithstanding anything to the contrary set forth in this Agreement, no consent of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically Parent or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or Merger Sub will be required with respect to any item matter set forth in this Agreement to the budget, not more than ten percent (10%) in excess extent the requirement of such consent would violate any applicable law. Prior to the amount allocated inEffective Time, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) of the Company Disclosure Letter and its Subsidiaries shall exercise (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease in effect as of the date of this Agreement consistent with and made available to Parent prior subject to the date terms, conditions and restrictions of this Agreement;) control and supervision over their own business and operations.
Appears in 1 contract
Forbearance Covenants. (a) Except (A) as expressly contemplated by this Agreement, (Bi) as set forth in Sections 5.1 or 5.2 Section 7.2 of the Company Disclosure Letter, ; (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Dii) as approved or requested in advance by Parent in writing (which approval shall will not be unreasonably withheld, conditioned or delayed; other than for Section 7.2(f) which shall be at Parent’s sole discretion); provided that, if Parent fails to respond to a written request from the Company for consent required pursuant to this Section 7.2 reasonably promptly (but in no event more than seven (7) Business Days following the Company’s request) in writing provided in accordance with Section 11.2) after receipt of such request, Parent’s approval shall be deemed granted; or (iii) as expressly required or expressly contemplated by the terms of this Agreement or required by applicable Law or order, at all times during the period from commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII X and the Effective Time, the Company shall will not, and shall will not permit any of its Subsidiaries, to:
(ia) amend the Organizational Documents Charter, the Bylaws or any other similar organizational documents of any of the Company or Company’s Subsidiaries (other than immaterial changes to the organizational documents of any of its Subsidiaries);
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) except as set forth in Section 7.2(c) of the Company Disclosure Letter, issue, sell or sell, encumber, deliver, grant options or rights to purchase or receive, pledge, dispose of or deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities any equity or equity-based awards, options, warrants or rights of any kind to acquire any shares of, or securities convertible into, or exchangeable for any shares of, Company Capital Stock, or other securities in respect of, in lieu of, or in substitution for any class of its capital stock outstanding as of the Subsidiaries of the CompanyCapitalization Date, except (i) upon the exercise or settlement of, Company Options, Company RSUs or Company PSUs, in each case, outstanding as of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreement, including any offer letters, employment agreements or award agreements, or upon the settlement of Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Company; or (iv) as contemplated by Section 5.2(a)(vii);
(ivd) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s wholly owned Subsidiaries, directly or indirectly, adjust, reclassify, split, combine, combine or subdivide any of the Company’s or redeem, repurchase, purchase its Subsidiaries’ capital stock or other equity or voting interest;
(e) repurchase redeem or otherwise acquire reacquire, directly or amend the terms ofindirectly, any of the Company’s or its Subsidiaries’ capital stock or other equity or voting interest, other than (i) with respect to transactions solely among the Convertible Notes Company and its Subsidiaries or Capped Callssolely among Subsidiaries of the Company; (ii) the withholding or sale acquisitions of shares of Company Capital Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Options in order to pay the exercise price of such Company Options in accordance with the terms in effect on the date hereof; (iii) the withholding of shares of Company Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company Options and the settlement of Company RSUs or Company PSUs in accordance with their termsor the lapse of restrictions applicable to Company RSAs and Company PSAs; or and (iiiiv) the acquisition by the Company of Company RSUs or Options, Company RSAs, Company RSUs, Company PSAs and Company PSUs in connection with the forfeiture of such awards awards, in each case, in accordance with their termsterms as of the date of this Agreement;
(f) (i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company Company, or one of its the Company’s other wholly owned Subsidiaries; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest; or (iii) modify the terms of any shares of its capital stock or other equity or voting interests;
(vig) (i) incur, guarantee or assume or suffer any indebtedness Indebtedness for borrowed money (including any long-term or short-term debt) or issue any debt securities, except, in each case, for except (A) for trade payables incurred in the ordinary course of business; (B) loans obligations pursuant to business credit cards and reimbursement and payment liabilities pursuant to letters of credit, banker’s acceptances or advances similar items, in each case, in an amount not to direct or indirect wholly owned Subsidiaries of exceed $9,000,000 in the Company; (C) short-term debt incurred to fund operations of the business aggregate and in the ordinary course of business; (C) Indebtedness under the existing credit facilities; (D) obligations incurred pursuant additional Indebtedness for borrowed money in an aggregate principal amount not to business credit cards exceed $1,000,000 in the aggregate (provided that the Company shall provide written notice to Parent prior to any incurrences of Indebtedness for borrowed money, even if less than $1,000,000 in the aggregate); or (E) intercompany loans or advances between or among the Company and its Subsidiaries;
(h) mortgage or pledge any of its and its Subsidiaries’ assets, tangible or intangible, or create or incur any lien thereupon (other than Permitted Liens), other than (i) in the ordinary course of business; and (E) business consistent with past practice in an aggregate principal amount not to exceed $1,000,000 in the incurrence of indebtedness under the Company Loan Agreement (including as amended, substituted aggregate or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse in connection with financing transactions permitted by Section 7.2(g) or otherwise become liable or responsible consented to by Parent;
(whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iiii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1i) short-term extensions of credit to customerscustomers in the ordinary course of business; (2ii) short-term advances to directors, officers and other employeesemployees for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance in all material respects with the Company Group’s policies related thereto; and (iii) loans, advances or other extensions of credit or capital contributions to, or investments in, the Company or any of its Subsidiaries of the Company;
(j) lease, license, abandon, sell, transfer, assign, guarantee or exchange, let lapse, expire or otherwise dispose of any (i) material Intellectual Property (except for non-exclusive licenses granted in the ordinary course of business or expiration of Registered Intellectual Property at the end of its statutory term) or (ii) tangible assets in excess of $1,000,000 in the aggregate, other than (A) pursuant to financing transactions permitted by Section 7.2(g) or consented to by Parent; and (B) or any capital expenditures permitted by (or consented to by Parent under) Section 7.2(p);
(k) modify in any material adverse manner, any of its policies related to Data Protection Requirements, or any administrative, technical or physical safeguards related to privacy or data security or IT Systems, except to comply with Data Protection Requirements;
(l) except as may be required by any Employee Plan or applicable Law, (i) enter into, establish, adopt, amend or terminate any material Employee Plan or other compensation or benefit plan, program, policy, contract agreement or arrangement that would constitute a material Employee Plan if in effect on the date of this Agreement; (3ii) loans increase or advances between wholly owned accelerate or commit to accelerate the funding, payment or vesting of the compensation or benefits provided of any current or former director, officer, employee, or individual consultant of the Company Group, including under any Employee Plan or any other benefit or compensation plan, agreement, contract, program, policy or arrangement; (iii) grant, pay or commit to pay, announce or enter into any cash or equity or equity-based incentive award, bonus, transaction, change in control, severance or similar agreement or any retention or similar agreement with any current or former director, officer, employee, or individual consultant of the Company Group; (iv) hire, promote or engage, or otherwise enter into any employment or individual consulting agreement or arrangement with, any current or former employee, officer, director or other service provider of the Company Group whose annualized base compensation opportunities would exceed $225,000; or (v) terminate any employee, officer, director, or individual consultant of the Company Group other than for cause, whose annualized base compensation exceeds $225,000;
(m) except as set forth in Section 7.2(m) of the Company Disclosure Letter, settle, release, waive or compromise, or offer or propose to settle, release, waive or compromise, any pending or threatened material Legal Proceeding or other claim, except for the settlement of any Legal Proceedings or other claim that is (i) reflected or reserved against in the Audited Company Balance Sheet; (ii) for solely monetary payments of, net of insurance recovery, no more than $200,000 in the aggregate and that does not involve (x) any admission of wrongdoing or (y) does not impose any material restriction on the business or activities of the Company or any current or future Subsidiaries of the Company or between the Company and Parent or its current or future Subsidiaries; and or (4iii) capital contributions settled in compliance with Section 8.13;
(n) except as required by applicable Law or to wholly owned Subsidiaries GAAP, (i) revalue in any material respect any of the Companyits properties or assets, in each case of clauses (1) through (4)including writing-off notes or accounts receivable, other than in the ordinary course of business; or (ivii) mortgage make any material and substantive change in any of its tax or pledge any assetsaccounting methods, tangible principles or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Lienspractices;
(viii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority;
(xi) (i) make, change or revoke any material Tax election; (ii) settle, consent to or compromise file any Tax Return in a manner inconsistent with past practice; (iii) file any material amended Tax Return; (iv) request any material Tax liability ruling or enter into any audit, examination or other proceeding relating closing agreement with respect to a material amount of Taxes; (iiiv) adopt settle, abandon or change compromise any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law)proceeding; (vi) surrender extend or waive any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) request in writing any material Tax ruling from any Governmental Authority, (ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses ; or (vii) and surrender any claim for a material refund of Taxes;
(x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiip) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%expenditure(s) in excess of $250,000 in the amount allocated inaggregate, other than consistent with the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii7.2(p) of the Company Disclosure Letter and Letter;
(q) enter into, modify, amend, extend, waive, or terminate any (i) Contracts (other than any Material Contract) that if so entered into, modified, amended or terminated would, individually or in the aggregate, have a Company Material Adverse Effect; or (ii) pursuant to obligations imposed by any Material Contract or Real Property Lease any Contract that would have been a Material Contract if such Contract was in effect existence as of the date of this Agreement Agreement, except in the ordinary course of business or as permitted under Section 7.2(c) and made available Section 7.2(l);
(r) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to Parent prior be disclosed pursuant to Item 404, except as permitted under Section 7.2(l);
(s) acquire (by merger, consolidation or acquisition of stock or assets) any other Person or any material portion thereof or material equity interest therein or enter into any Contract that involves a joint venture entity, limited liability company or legal partnership (excluding commercial arrangements that do not involve the date formation of an entity with any third Person) except in respect of any merger, consolidation or business combination among the Company and its Subsidiaries or among the Company’s Subsidiaries;
(t) except as required by applicable Law or a Collective Bargaining Agreement, (i) negotiate, enter into, modify, extend or terminate any Collective Bargaining Agreement; or (ii) recognize or certify any labor union, works council or other labor organization, employee representative or group of employees, as the bargaining representative for any employees of the Company Group;
(u) maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice, unless mandated by the insurance carrier;
(v) waive or release any noncompetition, nonsolicitation, non-disclosure, noninterference, non-disparagement, or other similar restrictive covenant obligation of any current or former employee or independent contractor in the event that the Company Group has Knowledge of an actual or threatened breach of such obligation;
(w) implement any mass layoff or plant closing that would trigger the notice requirements of the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state Law;
(x) engage in any of the actions set forth in Section 7.2(x) of the Company Disclosure Letter; or
(y) enter into, authorize any of, or agree or commit to enter into a Contract to take any of the actions prohibited by this Agreement;Section 7.2.
Appears in 1 contract
Forbearance Covenants. Except (a) Except (A) as expressly contemplated by this Agreement, (Bb) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, (Cc) as required by applicable Law Law, (d) as necessary or Orderadvisable in response to COVID-19 and any COVID-19 Measures, or Contracts set forth in Sections 5.1 or 5.2 including to (A) protect the health and safety of the Company Disclosure Letter Company’s and its Subsidiaries’ employees; or (DB) respond to third-party supply or service disruptions caused by COVID-19 or any COVID-19 Measures; provided that prior to making any such changes, the Company shall have, in each case, to the extent reasonably practicable, notified and consulted with Parent and considered in good faith Parent’s views with respect to such changes or (e) as approved or requested by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), during the period from the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not, and shall not permit any of its their Subsidiaries, to:
(ia) amend the Organizational Documents of the Company or any of its SubsidiariesSubsidiaries in any respect;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliver, deliver any Company Securities or securities of any of the Subsidiaries of the CompanySecurities, except (i) upon the settlement of Convertible Notes in accordance with the terms of the Convertible Notes Indentures; (ii) as required under the terms of any agreements in effect on the date of this Agreementvesting, including any offer letters, employment agreements or award agreementsexercise, or upon the settlement of of, Company RSUs or Company PSUs in accordance with the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the CompanyEquity Awards; or (ivii) as contemplated by Section 5.2(a)(vii5.2(g), Section 6.9 or Section 6.11;
(ivd) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) the acquisitions of shares of Company Class A Common Stock in connection with respect the surrender of shares of Company Class A Common Stock by holders of Company PSOs issued prior to the Convertible Notes or Capped Calls; date hereof in order to pay the exercise price of such Company PSOs as part of the net settlement thereof, (ii) the withholding or sale of shares of Company Capital Common Stock to satisfy Tax obligations incurred in connection with the exercise of Company PSOs issued prior to the date hereof and the vesting and settlement of Company RSUs or Company PSUs PSUs, in accordance with their terms; or each case, issued prior to the date hereof and (iii) the acquisition by the Company of Company RSUs or Company PSUs Equity Awards in connection with the forfeiture of such awards awards, in the case of clauses (i), (ii) and (iii), in accordance with their terms;
(e) (i) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for (A) cash dividends made by any direct or indirect wholly owned Subsidiary of ATC Holdings to another Subsidiary of the Company to the Company that, is directly or one of its other indirectly, wholly owned Subsidiariesby ATC Holdings; or (B) Tax distributions made in accordance with the Organizational Documents of ATC Holdings; or (ii) pledge or encumber (other than Permitted Liens not securing Indebtedness) any shares of its capital stock or other equity or voting interest, except under the Company Credit Agreement;
(vif) (i) incur, assume assume, endorse, guarantee, or suffer otherwise become liable for any indebtedness for borrowed money or issue any debt securitiesmoney, except, in each case, for except (A) trade payables incurred borrowings in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E) the incurrence of indebtedness for working capital purposes under the ABL Company Loan Credit Agreement (including as amended, substituted or replaced as permitted by this Agreement); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of direct or indirect wholly owned Subsidiaries of the Company; (iii) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employees; (3) loans or advances between wholly owned Subsidiaries of the Company or between the Company and its Subsidiaries; and (4) capital contributions in or to wholly owned Subsidiaries of the Company, in each case of clauses (1) through (4), in the ordinary course of business; or (iv) mortgage or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Liens;
(vii) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date hereof or under revolving facilities that replace, renew, extend, refinance or refund such existing credit facilities (including indebtedness incurred to repay or refinance related fees and expenses), (B) guarantees or credit support provided by the Company or any of this Agreement or as set forth in Section 5.2(a)(vii) its Subsidiaries of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee obligations of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan to the extent such indebtedness is in accordance with its terms as in effect as of existence on the date of this AgreementAgreement or incurred in compliance with this Section 5.2(f), (C) performance bonds and surety bonds entered into in the ordinary course of business in a manner consistent with past practices, (D) any indebtedness among the Company and its Subsidiaries or among the Company’s Subsidiaries or (E) any additional indebtedness in an amount not to exceed $5,000,000 in the aggregate; provided that such indebtedness referred to in this clause (E) may be repaid without penalty at the Closing or (ii) permit any of its material assets to become subject to a lien or other encumbrance (other than a Permitted Lien);
(g) (i) adopt or amend in any material respect, or terminate any material Employee Plan or any arrangement that would be a material Employee Plan if it were in effect on the date hereof; (cii) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred increase the compensation or similar payment benefits of, or benefit to grant any equity awards to, any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (eiii) hire or hire, engage or terminate (other than for cause the employment or upon resignation) engagement of any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an earning annual cash fee base compensation equal to or in excess of less than three hundred thousand dollars ($300,000)200,000 or at or above the Senior Vice President or Director level; except, in the case of each of clauses (ai) and (ii), (bA) any increase in base compensation in the ordinary course of business consistent with past practice for non-officer employees whose annual base compensation does not exceed $200,000 after giving effect to such increase and whose title is below the Senior Vice President or Director level; (c)B) to the extent required by applicable Law or pursuant to any Employee Plan in effect on the date of this Agreement and disclosed on the Company Disclosure Letter; or (C) in conjunction with immaterial annual renewal or plan design changes for health and welfare Employee Plans that are made in the ordinary course of business consistent with past practice or (D) other than with respect to equity awards, in conjunction with ordinary course new hires, promotions, hires and promotions of non-executive employees earning less than $200,000 per year and who are below the Senior Vice President or Director level and changes in job position or status of any director, officer current employee or other service provider to non-executive employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of positions earning less than three hundred thousand dollars $200,000 per year and that are below the Senior Vice President or Director level, consistent with past practice; and except, in the case of each of clauses ($300,000ii) and (iii);
(viii) waive, release with respect to a non-executive employee or amend any material restrictive covenant obligation of any current individual service provider whose compensation is, in whole or former employeein part, independent contractor, officer or director directly billable to a client of the Company or its SubsidiariesSubsidiaries and does not create a net annual compensation overhead burden borne by the Company or any of its Subsidiaries that exceeds $200,000;
(ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(xh) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by any change in GAAP, Regulation S-X of the Exchange Act (or any change in the interpretation thereof) ), or by any Governmental AuthorityAuthority or other applicable change in Law;
(xii) enter into, modify in any material respect, amend in any material respect, waive any material rights under or terminate (other than any Material Contract that has expired in accordance with its terms) any Material Contract except, in each case, for renewals in the ordinary course of business on terms that are not less favorable to the Company and its Subsidiaries; provided that any Material Contract (x) described by the definition set forth in Section 1.1(zzzz)(iii) shall be exclusively governed by Section 5.2(k) and (y) described by the definition set forth in Section 1.1(zzzz)(vii) shall be exclusively governed by Section 5.2(f);
(j) acquire any material interest in any Person or any division, assets, properties, businesses or equity securities thereof (including by merger, consolidation or acquisition of stock or assets), other than (i) makeby ATC Holdings or any of its direct or indirect wholly owned subsidiaries of any other direct or indirect wholly owned Subsidiary ATC Holdings LLC, (ii) purchases of assets in the ordinary course of business (other than for the purpose of acquiring a Person through an alternate structure) or (iii) that do not exceed $1,000,000 in the aggregate;
(k) sell, assign, transfer, lease, mortgage, pledge, surrender, encumber, divest, or otherwise dispose of (other than pursuant to the expiration thereof in the ordinary course of business), any of the Company’s or its Subsidiaries’ material tangible assets or businesses, other than (i) such sales, assignments, transfers, leases, mortgages, pledges, surrenders, encumbrances, divestitures or other dispositions that (A) are in the ordinary course of business, or (B) do not have a purchase price that exceeds $500,000 and (ii) such mortgages or pledges pursuant to the Company Credit Agreements;
(l) sell, assign, transfer, convey, license, abandon, allow to lapse or otherwise dispose of or impair any material Company Intellectual Property, except (i) for non-exclusive licenses granted to customers and service providers in the ordinary course of business and (ii) the expiration of items of Company Intellectual Property in accordance with their maximum statutory term;
(m) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or any Company Related Party, other than transactions, agreements, arrangements or understandings entered into in the ordinary course of business on arm’s length terms with, other than in respect of transactions, agreements, arrangements or understandings relating to employment (which shall not be subject to the following amount), a value of less than $100,000 individually;
(n) make any capital expenditure other than expenditures that (A) are specifically enumerated in the Company’s plan set forth on Section 5.2(n) of the Company Disclosure Letter or (B) are less than $1,000,000 in any one instance and $2,000,000 in the aggregate;
(o) make any loans, advances or capital contributions to or investments in any Person (other than (i) by the Company or ATC Holdings in any of ATC Holdings’ direct or indirect wholly owned Subsidiaries or (ii) pursuant to operating leases and extensions of credit terms to customers, in each case in the ordinary course of business consistent with past practice);
(p) (A) make (outside of the ordinary course of business), change or revoke any material Tax election; , (iiB) settle, consent to enter into any settlement or compromise of any material Tax liability or any auditliability, examination or other proceeding relating to a material amount of Taxes; (iii) adopt or change any accounting method or change an annual accounting period; (ivC) file any amended material Tax Returns; Return, (vD) adopt or change any material method of Tax accounting, (E) enter into any “closing agreement” within agreement relating to any material amount of Taxes, (F) agree to extend the meaning statute of Section 7121 limitations in respect of any material amount of Taxes (other than pursuant to automatic extensions of time to file Tax Returns obtained in the Code ordinary course of business) or (or any analogous or similar provision of state, local or non-U.S. Law); (viG) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (vii) consent to any extension or waiver of any limitation period with respect to any material Tax claim refund;
(q) negotiate, enter into, amend, extend, or assessment relating to terminate any CBA or recognize or certify any Union as the bargaining representative for any employees of the Company or any of its Subsidiaries; ;
(r) implement any layoffs affecting, place on unpaid leave or furlough, or materially reduce the hours or weekly pay of, twenty-five (viii25) request or more employees at any site of employment at one time;
(s) waive or release in writing any material Tax ruling from any Governmental Authoritynon-competition, (ix) file any material Tax Returns inconsistent with past practicenon-solicitation, (x) except non-disclosure, non-interference, non-disparagement or other restrictive covenant obligation in the ordinary course favor of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining Subsidiaries that is material to the Company and its Subsidiaries, taken as a whole;
(t) settle any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xii) incur or commit to incur any capital expenditures other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii) earn-out obligation of the Company Disclosure Letter or any of its Securities that has become due and payable in Company Securities other than in cash (ii) pursuant to obligations imposed the extent permitted by any Material Contract or Real Property Lease the terms thereof), as required by the terms thereof as in effect as of the date of this Agreement and made available to Parent prior to the date of this Agreement;
(u) settle or compromise any litigation other than for the payment of cash in aggregate amount not to exceed $250,000 in any one instance or $1,000,000 in the aggregate and other terms that do not impose any material restriction on the business or operations of the Company or any of its Subsidiaries (or Parent or any of its Subsidiaries after the Closing);
(v) take any action set forth on Section 5.2(v) of the Company Disclosure Letter; or
(w) agree, resolve or commit to take any of the actions prohibited by this Section 5.2.
Appears in 1 contract
Samples: Merger Agreement (Atlas Technical Consultants, Inc.)
Forbearance Covenants. (a) Except (A) as expressly contemplated by this Agreement, (Bi) as set forth in Sections 5.1 or Section 5.2 of the Company Disclosure Letter, ; (C) as required by applicable Law or Order, or Contracts set forth in Sections 5.1 or 5.2 of the Company Disclosure Letter or (Dii) as approved or requested by Parent in writing (which approval shall will not be unreasonably withheld, conditioned or delayed); (iii) in respect of Section 5.2(j), Section 5.2(o), Section 5.2(w), Section 5.2(x), Section 5.2(y) and Section 5.2(aa) (to the extent relating to the Sections referenced in this clause (iii)), for any actions taken reasonably and in good faith that are necessary to respond to COVID-19 Measures and that are not intended to circumvent the restrictions set forth in this Section 5.2; or (iv) as expressly contemplated by the terms of this Agreement or required by applicable law, at all times during the period from commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall will not, and shall will not permit any of its Subsidiaries, to:
(ia) amend the Organizational Documents of Charter, the Company Bylaws, or any of its Subsidiariesother similar organizational document;
(iib) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iiic) issue, sell or deliversell, deliver or agree or commit to issue, sell or deliverdeliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company Securities or securities of any of the Subsidiaries of the CompanySecurities, except (iA) upon for the issuance or sale of shares of Company Common Stock in connection with the exercise or settlement (as applicable) of Convertible Notes the Company Equity Awards outstanding as of the date hereof in accordance with the terms as in effect on the date hereof or pursuant to purchase rights under the Company ESPP outstanding as of the Convertible Notes Indentures; date hereof in accordance with their terms as in effect on the date hereof or (iiB) as required under the terms of any in connection with agreements in effect on the date of this Agreementhereof and made available to Parent;
(d) directly or indirectly acquire, including repurchase or redeem any offer letterssecurities, employment agreements or award agreementsexcept for (A) repurchases, withholdings, or upon the settlement cancellations of Company RSUs or Securities pursuant to the terms and conditions of the Company PSUs Equity Awards outstanding as of the date hereof in accordance with their terms as in effect on the applicable terms; (iii) for the issuance, delivery or sale of (or agreement to issue, sell or deliver) equity securities by any Subsidiary of the Company to the Companydate hereof; or (ivB) as contemplated by Section 5.2(a)(vii)transactions between the Company and any of its direct or indirect Subsidiaries;
(ive) except for transactions solely among the Company and its Subsidiaries or solely among the Company’s Subsidiaries, directly or indirectly, reclassify(A) adjust, split, combinecombine or reclassify any shares of capital stock, subdivide or redeem, repurchase, purchase issue or otherwise acquire authorize or amend propose the terms issuance of any other Company Securities in respect of, in lieu of or in substitution for, any shares of its capital stock or other equity or voting interest, other than (i) with respect to the Convertible Notes or Capped Calls; (ii) the withholding or sale of shares of Company Capital Stock to satisfy Tax obligations incurred in connection with the settlement of Company RSUs or Company PSUs in accordance with their terms; or (iii) the acquisition by the Company of Company RSUs or Company PSUs in connection with the forfeiture of such awards in accordance with their terms;
(iB) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the any shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly wholly-owned Subsidiary of the Company to the Company Company, or one of its the Company’s other wholly wholly-owned Subsidiaries; or (iiC) pledge or encumber any shares of its capital stock or other equity or voting interest; or (other than Permitted Liens not securing IndebtednessD) modify the terms of any shares of its capital stock or other equity or voting interest;
(vif) (iA) incur, incur or assume or suffer any indebtedness for borrowed money (including any long-term or short-term debt) or issue any debt securities, except, in each case, except (1) for (A) trade payables incurred in the ordinary course of business; (B) loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (C) short-term debt incurred to fund operations of the business in the ordinary course of business; (D2) obligations incurred pursuant to business credit cards in the ordinary course of business; and (E3) the incurrence of indebtedness under intercompany loans or advances between or among the Company Loan Agreement and its direct or indirect wholly-owned Subsidiaries; or (including as amended, substituted or replaced as permitted by this Agreement); (iiB) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of any direct or indirect wholly wholly-owned Subsidiaries of the Company; ;
(iiig) mortgage or pledge any of its and its Subsidiaries’ assets, tangible or intangible, or create or incur any lien thereupon (other than Permitted Liens), other than in connection with financing transactions permitted by Section 5.2(f) or consented to by Parent;
(h) make any loans, advances or capital contributions to, or investments in, any other Person, except for (1) extensions of credit to customers; (2) advances to directors, officers and other employeesemployees for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance in all material respects with the Company Group’s policies related thereto; and (32) loans loans, advances or advances between wholly owned Subsidiaries of capital contributions to, or investments in, the Company or between the Company and its Subsidiaries; and (4) capital contributions in any direct or to wholly indirect wholly-owned Subsidiaries of the Company;
(i) acquire, lease, license, sell, abandon, transfer, assign, guarantee, or exchange any assets, tangible or intangible (including any Company Intellectual Property), in each case in excess of clauses $150,000 individually, and other than (1) through the sale, lease or licensing of products or services of the Company Group or other materials embodying Company Intellectual Property in the ordinary course of business; (2) the acquisition, lease or license of products or services by the Company Group in the ordinary course of business, (3) the acquisition, assignment, abandonment or expiration (at the end of its maximum statutory duration in accordance with its statutory terms) of Company Intellectual Property in connection with the exercise of the reasonable business judgment of the Company Group in the ordinary course of business; (4) the abandonment of trade secrets in the ordinary course of business and to the extent not economically desirable to maintain for the conduct of the business of the Company Group; and (5) any capital expenditures permitted by (or consented to by Parent under) Section 5.2(n);
(j) (A) enter into, adopt, amend (including accelerating the vesting, payment or funding), modify or terminate any bonus, profit sharing, compensation, severance, termination, option, appreciation right, performance unit, phantom equity, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other Employee Plan in any manner (other than at-will offer letters entered into with new hires or separation agreements with employees of employees of the Company Group, in each case, in the ordinary course of business and whose annual salary is less than $250,000); (B) increase or decrease the compensation of any director, officer, employee, individual consultant, former employee, individual independent contractor, or other individual service provider of the Company Group; (C) pay or grant (or accelerate the time of payment or vesting of) any compensation or benefit not provided for by any Employee Plan as in effect as of the date hereof; (D) enter into any gross-up, change in control, severance or similar agreement or any retention or similar agreement with any officer, employee, director, individual independent contractor, individual consultant, or other individual service provider of the Company Group, or (E) hire, terminate (other than for “cause”), furlough or temporarily lay off any officer, employee, director, individual independent contractor, individual consultant, or other individual service provider of the Company Group with an annual base salary or wages (or, in the case of non-employee service providers, equivalent compensation) of $250,000 or more; except in each case, as required by the terms of the applicable Employee Plan in effect as of the date hereof;
(k) settle, release, waive or compromise any pending or threatened material Legal Proceeding or other claim, except for the settlement of any Legal Proceeding or other claim that is (A) reflected or reserved against in the consolidated financial statements of the Company Group as of the end of the most recently completed fiscal quarter of the Company Group included in the Company SEC Reports filed prior to the date hereof and; (B) for solely monetary payments of, net of insurance recovery, no more than $100,000 individually and $250,000 in the aggregate; or (C) settled in compliance with Section 6.15;
(l) except as required by applicable law or GAAP, (A) revalue in any material respect any of its properties or assets, including writing-off notes or accounts receivable, other than in the ordinary course of business; or (ivB) mortgage make any change in any of its accounting principles or pledge any assets, tangible or intangible, or create or suffer to exist any lien thereupon, except for any Permitted Lienspractices;
(viiA) except as required pursuant to the terms of any Employee Plan or Collective Bargaining Agreement, or any Contract relating thereto, in accordance with its terms as in effect on the date of this Agreement or as set forth in Section 5.2(a)(vii) of the Company Disclosure Letter, (a) enter into, adopt, amend or modify in any material respect or terminate any Employee Plan, other than 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; (b) increase the compensation or benefits of any current or former director, executive officer or employee of the Company or any of its Subsidiaries or pay any amount or provide any benefit not provided under any Employee Plan in accordance with its terms as in effect as of the date of this Agreement; (c) grant or pay (or promise to grant or pay) any bonus or other incentive compensation, severance, retention, transaction, change of control, deferred compensation or similar payment or benefit to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; (d) take any action to accelerate the vesting, lapsing of restrictions or any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries; or (e) hire or engage or terminate make (other than for cause or upon resignation) any director, officer, employee or individual independent contractor, other than, in the ordinary course of business, any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000); except, in the case of each of clauses (a), (b) and (c), in conjunction with ordinary course new hires, promotions, changes in job position or status of any director, officer or employee who is not a member of the Executive Group or any individual independent contractor with an annual cash fee of less than three hundred thousand dollars ($300,000);
(viii) waive, release or amend any material restrictive covenant obligation of any current or former employee, independent contractor, officer or director of the Company or its Subsidiaries;
(ix) settle any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceeding that (i) is for solely monetary payments of no more than two million dollars ($2,000,000) individually and ten million dollars ($10,000,000) in the aggregate and does not impose any material non-monetary obligations on, or restrictions against, or require an admission of liability by, the Company or its Subsidiaries; or (ii) is settled in compliance with Section 6.12;
(x) materially change the Company’s or its Subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof) or by any Governmental Authority;
(xi) (i) make, change or revoke any material Tax election; (iiB) settle, consent to or compromise any material Tax liability claim or any audit, examination assessment or other proceeding relating surrender a right to a material amount of TaxesTax refund; (iii) adopt or change any accounting method or change an annual accounting period; (iv) file any amended material Tax Returns; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or non-U.S. Law); (vi) surrender any right to claim a refund for material Taxes (other than solely as a result of the passage of time); (viiC) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment relating to assessment; (D) file an amended Tax Return that could materially increase the Taxes payable by the Company or any of its Subsidiaries; or (viiiE) request in writing enter into a closing agreement with any Governmental Authority regarding any material Tax ruling from any Governmental Authority, Tax;
(ix) file any material Tax Returns inconsistent with past practice, (x) except in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, provided, that clauses (vii) and (x) shall not prevent the Company or any of its subsidiaries from obtaining any extensions of time to file any Tax Returns that are granted automatically or routinely by an applicable Governmental Authority; (xiin) incur or commit to incur any capital expenditures expenditure(s) other than (i) consistent with, or with respect to any item set forth in the budget, not more than ten percent (10%) in excess of the amount allocated in, the capital expenditure budget for such item for the fiscal year 2024, set forth in Section 5.2(a)(xii5.2(n) of the Company Disclosure Letter;
(o) enter into, modify, amend or terminate any (i) Contract (other than any Material Contract) that if so entered into, modified, amended or terminated would, individually or in the aggregate, have a Company Material Adverse Effect; or (ii) Material Contract or any Contract that would have been a Material Contract if such Contract was in existence as of the date hereof, except in the ordinary course of business or as expressly permitted under this Section 5.2 or, in the case of this clause (ii), other than terminations under the terms of the Contract in connection with the counterparty’s breach;
(p) acquire (by merger, consolidation or acquisition of stock or assets) any other Person or any material portion thereof or material equity interest therein that involves consideration valued in excess of $500,000 in the aggregate, or enter into any joint venture, limited liability company or legal partnership or similar arrangement (excluding, for avoidance of doubt, reseller agreements and other commercial agreements that do not involve the formation of an entity with any third Person);
(q) (A) enter into any Collective Bargaining Agreement or agreement or arrangement to form a works council or other Contract with any labor union or other labor organization or works council, except to the extent required by applicable law; or (B) recognize or certify any labor union, works council or other labor organization, or group of employees, as the bargaining representative for any employees of the Company Group, except as required by applicable law;
(r) waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor;
(s) adopt or implement any shareholder rights plan or similar arrangement, in each case, applicable to the Merger or any other transaction consummated pursuant to Parent’s rights under Section 5.3(e)(i)(2) or Section 5.3(e)(ii)(2);
(t) fail to maintain in full force and effect, in any material respect, material insurance policies covering the Company and its Subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practice, unless the Company determines in its reasonable commercial judgment that the form or amount of such insurance should be modified;
(u) (i) sell any Owned Real Property or (ii) purchase any real property or portion thereof or interest therein that involve consideration valued in excess of $500,000;
(v) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;
(w) implement or announce any employee layoffs, plant closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that could implicate the WARN Act;
(A) close any stores that results in a material deviation from the store closure plan set forth in Section 5.2(x) of the Company Disclosure Letter (the “Store Closure Plan”), (B) with respect to the timing of any store closure listed in the Store Closure Plan, take any action or fail to take any action that results in a material deviation from the timing of any such store closure as set forth in the Store Closure Plan, (C) with respect to any store closure listed in the Store Closure Plan, commit to incur (or incur) any lease breakage costs or similar amounts materially in excess of the amount set forth on the Store Closure Plan;
(i) open any new stores or enter into any lease with respect to a new store that results in a material deviation from the store opening and lease plan set forth in Section 5.2(y) of the Company Disclosure Letter (the “Store Opening Plan”) or (ii) pursuant to obligations imposed by renew or extend any Material existing store leases for a term in excess of three years from the date such lease would otherwise expire or terminate in accordance with its current terms;
(z) other than in the ordinary course of business, enter into any Contract (other than any Contract with any employee or Real Property Lease service provider of the Company Group or that would otherwise constitute an Employee Plan if in effect as of the date of hereof and that is not otherwise prohibited by this Agreement and made available Section 5.2) which contains a change in control or similar provision that pursuant to Parent prior its terms would require a payment to the date other party or parties thereto in connection with the Merger or the other transactions (including in combination with any other event or circumstance) or any subsequent change in control of the Company or any of its Subsidiaries;
(aa) other than in the ordinary course of business, acquire or purchase any inventory that results in a material deviation from the inventory purchase plan of the Company Group set forth in Section 5.2(aa) of the Company Disclosure Letter; or
(bb) enter into, authorize any of, or agree or commit to enter into a Contract to take any of the actions prohibited by this Agreement;Section 5.2.
Appears in 1 contract
Samples: Merger Agreement (Chico's Fas, Inc.)
