Standstill. (a) From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Investor Rights Agreement (FTD Companies, Inc.), Investor Rights Agreement (FTD Companies, Inc.)

Standstill. Without the approval or written consent of the Board of Directors, none of the General Atlantic Stockholders or any of their Affiliates, and none of the Coinvestor Stockholders or any of their respective Affiliates shall, severally and not jointly, at any time prior to the Standstill Expiration Date: (a) ~~From and after~~ purchase or otherwise acquire, or propose or offer to purchase or acquire, any shares of the ~~date hereof~~Company's capital stock, whether by tender offer, market purchase, privately negotiated purchase, merger or otherwise, any shares of the ~~Investor will not, and will cause each Investor Affiliate not to, directly~~ Company's capital stock or ~~indirectly, acquire Beneficial Ownership~~ any Common Stock Equivalents in excess of the number of shares of ~~Issuer~~ the Company's capital stock and Common ~~Stock, including for purposes~~ Stock Equivalents purchased pursuant to the Stock Purchase Agreement (subject to adjustments and issuances of ~~this Section 1.1(a~~additional Common Stock Equivalents pursuant to the Series D Preferred Stock Certificate of Designation) with respect to each such Stockholder and its Affiliates considered severally and not jointly with any other Stockholder and its Affiliates (the "Standstill Ceiling"), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that in no event shall any such ~~restriction on acquisitions will not be applicable~~ Stockholder acquire any Shares in a transaction in such an amount that when aggregated with ~~respect to~~ the shares of the Company's capital stock already owned by such Stockholder, the acquisition by of such shares of the ~~Investor Affiliates~~ Company's capital stock would require stockholder approval under applicable Nasdaq rules and policies; and provided, further, that the dividends that accrue on the shares of ~~Beneficial Ownership of Issuer Common~~ Series D Preferred Stock ~~(i)~~ pursuant to the ~~Purchase Agreement (unless,~~ terms thereof shall be excluded for purposes of calculating whether or not a Stockholder and its Affiliates have exceeded the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors.Standstill Ceiling; (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions except as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth specified in this ~~Section 1.1(b)~~Agreement, ~~a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers~~make, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate inparticipate, directly or indirectly, in any “"solicitation” " of ~~“proxies”~~ "proxy" (as such terms are defined ~~under~~ or used in Regulation 14A ~~under~~ of the Exchange Act) to vote, or seek to advise or influence any Person ~~or entity~~ with respect to the voting of, any ~~Issuer Common Stock~~ shares of the Company's capital stock, or become a "participant" in any "election contest" (as such terms are used or defined in Regulation 14A of the Exchange Act) relating to the election of directors of the Company; provided, however, that none of the General Atlantic Stockholders, the Coinvestor Stockholders or any ~~demand for~~ of their respective Affiliates shall be deemed to have engaged in a ~~copy~~ "solicitation" or to have become a "participant" by reason of ~~Issuer’s stock ledger~~the membership of designees of the General Atlantic Stockholders, ~~list of stockholders~~ the Coinvestor Stockholders or any ~~other books and records~~ of ~~Issuer (other than with respect to matters related to~~ their respective Affiliates on the ~~Investor’s exercise or enforcement~~ Board of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesDirectors; (~~iii~~c) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group~~ "group" (within the meaning of Section 13(d)(3) of the Exchange Act) or otherwise act in concert with any ~~Person~~Person for the purpose of acquiring, ~~in each case~~holding, ~~with respect to the Issuer Common Stock,~~ voting or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members disposing of any shares of the ~~Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person~~Company's capital stock; provided, ~~in each case~~however, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause that (i) ~~above; (v) bring~~ the General Atlantic Stockholders may act as a group for the purpose of acquiring, holding, voting or disposing of any ~~action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any~~ shares of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~Company's capital stock, the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) ~~of this Section 1.1(f) has occurred~~ Vectis CP Holdings, LLC and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months any Affiliate thereof that acquires shares of the ~~date on which~~ Company's capital stock (the ~~Investor was released from such restrictions~~"Vectis Stockholders") may act as a group for the purpose of acquiring, ~~then so long as such transaction is not being actively pursued at such time~~holding, ~~the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e)~~ voting or ~~subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ disposing of any shares of the ~~Issuer Common Stock is commenced~~ Company's capital stock and (~~within the meaning of Section 14(d~~iii) Cenwell Limited, Campina Enterprises Limited and any Affiliate thereof that acquires shares of the ~~Exchange Act~~Company's capital stock (the "Cenwell Stockholders") by may act as a ~~third Person which~~group for the purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock; and provided further, that, for the avoidance of doubt, is the General Atlantic Stockholders, the Vectis Stockholders and the Cenwell Stockholders may not ~~an Investor Affiliate~~ together act as a group for all purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock; or (~~and not~~ d) request the Company (or its directors, officers, employees or agents), to take any action which would reasonably be expected to require pursuant to law the Company to make a public announcement or proposal or offer with respect to (i) any form of business combination or transaction involving ~~any breach of Section 1.1(d)) which~~ the Company including, without limitation, a merger, consolidation, tender ~~offer~~ or exchange offer, ~~if consummated~~sale or purchase of assets, ~~would result in such third party (~~or ~~any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%)~~ dissolution or liquidation of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business Company or (ii) ~~the Issuer provides~~ instigate, encourage or assist any ~~notice~~ Person to ~~Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management~~ do any of the ~~Issuer with respect to such proposed transaction or a competing proposal by the Investor~~foregoing.

Appears in 2 contracts

Samples: Stockholders Agreement (Vectis Cp Holdings LLC), Stockholders Agreement (Critical Path Inc)

Standstill. The Investor hereby agrees that the Investor (together with all of its subsidiaries in which Investor owns beneficially or of record a majority of the outstanding Voting Stock of such subsidiary ("Majority Owned Subsidiaries")) shall not acquire "beneficial ownership" (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of any Voting Stock (as defined below), any securities convertible into or exchangeable for Voting Stock, or any other right to acquire Voting Stock (except, in any case, by way of stock dividends or other distributions or offerings made available to holders of any Voting Stock generally) without the prior written consent of the Company, if the effect of such acquisition would be to increase the Voting Power of all Voting Stock then beneficially owned by the Investor or which it has a right to acquire (together with all Majority Owned Subsidiaries) to a percentage greater than nineteen and ninety-nine one hundredths percent (19.99%) (the "Standstill Percentage") of the Total Voting Power (as defined below) of the Company at the time in effect; provided that: (a) ~~From~~ The Investor may acquire Voting Stock without regard to the foregoing limitation, and ~~after~~ such limitation shall be suspended, but not terminated, if and for as long as (i) a tender or exchange offer is made and is not withdrawn or terminated by another person or group to purchase or exchange for cash or other consideration any Voting Stock that, if accepted or if otherwise successful, would result in such person or group beneficially owning or having the ~~date hereof~~right to acquire shares of Voting Stock with aggregate Voting Power of more than nineteen and ninety-nine one hundredths percent (19.99%) of the Total Voting Power of the Company then in effect (not counting for these purposes any shares of Voting Stock of the Company originally acquired (where such Shares or shares exchanged with the Company in respect thereof, are still held) by such person or group from the Investor ~~will not~~or any Majority Owned Subsidiary), and ~~will cause each~~ such offer is not withdrawn or terminated prior to the Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments making an offer to acquire ~~such ownership that derive their value (in whole~~ Voting Stock or ~~in part) from such Issuer Common~~ acquiring Voting Stock~~, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~; provided, however, that the foregoing standstill limitation will be reinstated once any such ~~restriction~~ tender or exchange offer is withdrawn or terminated, (ii) another person or group hereafter acquires Voting Stock with aggregate Voting Power of twenty percent (20%) or more of the Total Voting Power of the Company then in effect (not counting for these purposes any shares of Voting Stock of the Company originally acquired (where such Shares or shares exchanged with the Company in respect thereof, are still held) by such person or group from the Investor or any Majority Owned Subsidiary), where such person or group files a Schedule 13D (under the rules promulgated under Section 13(d) under the Securities and Exchange Act of 1934, as such rules and section are in effect on ~~acquisitions~~ the date hereof), or other similar or successor schedule or form, indicating that such person's or group's holdings equal or exceed twenty percent (20%); provided, however, that the foregoing standstill limitation will be reinstated once the percentage of Total Voting Power beneficially owned by such other person or group falls below twenty percent (20%); (iii) another person or group hereafter acquires Voting Stock that results in such person or group being required to file a Schedule 13G, or other similar or successor schedule or form, indicating that such other person or group beneficially owns or has the right to acquire Voting Stock with aggregate Voting Power equal to or more than twenty percent (20%) of the Total Voting Power of the Company (not counting for these purposes any shares of Voting Stock of the Company originally acquired (where such Shares or shares exchanged with the Company in respect thereof, are still held) by such person or group from the Investor or any Majority Owned Subsidiary); provided, however, that the foregoing standstill limitation will be reinstated once the percentage of Total Voting Power beneficially owned by such other person or group falls below twenty percent (20%); or (iv) another person or group orally or in writing contacts the Company and advises the Company of such person's or group's intention to commence a tender or exchange offer that, if so commenced, would result in a suspension pursuant to clause (i) above (e.g., a "bear hug" offer) and such contact by such person or group is publicly disclosed or otherwise becomes publicly known; provided, further, that if such a bear hug offer is not publicly disclosed or known to the public then the Company shall notify Investor of such bear hug and from time to time of its ongoing status (which information Investor shall treat as confidential); provided, however, that the foregoing standstill limitation will be reinstated if such intention is withdrawn in writing or other reasonable evidence of such withdrawal is provided to the Investor. The Company shall notify the Investor in writing of the occurrence of any event described in clauses (i) through (iv) of the immediately preceding sentence as soon as practicable following the Company's becoming aware of any such event, and in any case, shall provide the Investor written notice of any such event within two (2) business days of the Company's being aware of the occurrence of any such event. (b) The Investor will not be ~~applicable with respect~~ obliged to dispose of any Voting Stock to the ~~acquisition~~ extent that the aggregate percentage of the Total Voting Power of the Company represented by Voting Stock beneficially owned by the Investor ~~Affiliates of Beneficial Ownership of Issuer Common Stock~~ or which the Investor has a right to acquire is increased beyond the Standstill Percentage (i~~) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii~~) as a result of ~~any stock splits, stock dividends~~ a recapitalization of the Company or ~~other distributions~~ a repurchase or ~~recapitalizations or similar offerings made generally available~~ exchange of securities by the ~~Issuer~~ Company or any ~~Subsidiary thereof to holders of Issuer Common Stock~~ other action taken by the Company or its affiliates; (~~or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer~~ii) as a the result of ~~their ownership~~ acquisitions of ~~Issuer Common~~ Voting Stock ~~(or other equity securities of~~ made during the ~~Issuer) including~~ period when the Investor's "standstill" obligations are suspended pursuant to ~~a shareholder rights plan or similar plan or agreement,~~ Section 8.1(a); (iii) as a result of ~~the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above~~an equity index transaction, provided that Investor shall not vote such shares; (iv) ~~in accordance with a Permitted Offer~~ by way of stock dividends or other distributions or rights or offerings made available to holders of shares of Voting Stock generally; (v) ~~which has been approved by~~ with the consent of a simple majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) independent authorized members of the ~~Exchange Act~~Company's Board of Directors; or (vi) as part of a ~~tender~~ transaction on behalf of Investor's Defined Benefit Pension Plan, Profit Sharing Retirement Plan, 401(k) Savings Plan, Sheltered Employee Retirement Plan and Sheltered Employee Retirement Plan Plus, or ~~exchange offer which~~any successor or additional retirement plans thereto (collectively, ~~if consummated, would result~~ the "Retirement Plans") where the Company's shares in such ~~Person becoming~~ Retirement Plans are voted by a trustee for the ~~Beneficial Owner~~ benefit of ~~Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer~~Investor employees or, ~~a “Third Party Offer”)~~for those Retirement Plans where Investor controls voting, ~~unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary~~ where Investor agrees not to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes vote any ~~action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect~~ shares of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in~~ Retirement Plan Voting Stock that would cause Investor to exceed the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted OfferStandstill Percentage. (c) ~~In the event the Investor Affiliates make a Permitted Offer~~As used in this Section 8, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage the term "Voting Stock" means the Common Stock and any other ~~Person~~ securities issued by the Company having the ordinary power to ~~effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to~~ vote in the ~~extent otherwise specifically permitted by this Agreement, any acquisition~~ election of ~~any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion~~ directors of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer Company (other than ~~with respect to matters related to~~ securities having such power only upon the ~~Investor’s exercise or enforcement~~ happening of ~~rights under the Purchase Agreement~~a contingency that has not occurred), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect~~ term "Voting Power" of any Voting Stock means the number of votes such Voting Stock is entitled to ~~a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ cast for directors of the ~~Issuer Board; (iii) subject to the obligations~~ Company at any meeting of shareholders of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d)Company, and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the ~~Issuer provides~~ term "Total Voting Power" means the total number of votes which may be cast in the election of directors of the Company at any ~~notice~~ meeting of shareholders of the Company if all Voting Stock was represented and voted to ~~Investor pursuant to~~ the fullest extent possible at such meeting, other than votes that may be cast only upon the happening of a contingency that has not occurred. For purposes of this Section ~~1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to~~8, the ~~Issuer Board~~ Investor shall not be deemed to have beneficial ownership of any Voting Stock held by a pension plan or ~~management~~ other employee benefit program of the ~~Issuer with respect~~ Investor if the Investor does not have the power to control the investment decisions of such ~~proposed transaction~~ plan or ~~a competing proposal by the Investor~~program.

Appears in 2 contracts

Samples: Common Stock Purchase Agreement (Avid Technology Inc), Common Stock Purchase Agreement (Intel Corp)

Standstill. Other than pursuant to the preemptive rights set forth in Article III, as contemplated by the Purchase Agreement, any exercise of the Warrant or actions taken by the Series A Director in his/her capacity as a member of the Board in light of such director’s fiduciary duties, until the earlier of (a) ~~From and after~~ the 3rd anniversary of the date hereof, (b) the ~~Investor will not~~expiration of the right of Series A Requisite Investors to elect the Series A Director, and ~~will cause each Investor Affiliate~~ (c) the date on which the Investors and their Affiliates beneficially own less than 5% of the shares of Common Stock then issued and outstanding, the Investors shall not to(provided, that the foregoing limitation shall only apply to the “Power Opportunities” and “Opportunities” strategies of the Investors, and not to any other strategies of the Investors, the Investors’ Affiliates or any of its or their other investments or portfolio companies), except as expressly approved or invited in writing by the Company: (i) directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares of Issuer~~ Common ~~Stock, including for purposes of this Section 1.1(a), rights, options~~ Stock or ~~other derivative securities~~ Common Stock Equivalents or ~~contracts or instruments to acquire such ownership~~ any instrument that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by gives the Investor or any of its Affiliates the economic equivalent of ~~Beneficial Ownership~~ ownership of ~~Issuer~~ Common Stock (~~i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct~~a “Derivative”), ; (ii) as make a ~~result of any stock splits~~tender, ~~stock dividends~~ exchange or other ~~distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof~~ offer to ~~holders of Issuer~~ acquire Common Stock (or ~~other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer~~ Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, Equivalents; (iii) ~~as a result~~ directly or indirectly, (1) seek to have called any meeting of the ~~exercise (~~stockholders of the Company or ~~exchange) of~~ propose any ~~rights distributed~~ matter to be voted upon by the ~~Issuer pursuant to clause (ii) above~~stockholders of the Company, ~~(iv) in accordance with a Permitted Offer~~ or (v2) ~~which~~ propose or nominate for election to the Board of Directors any person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~ Board of Directors (bexcluding the Series A Director); (iv) ~~Notwithstanding~~ directly or indirectly, knowingly encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) for Common Stock (if such offer or proposal would, if consummated, result in a Change of Control of the ~~provisions~~ Company, such offer or proposal is referred to as an “Acquisition Proposal”); provided, however, that from and after the filing of ~~Section 1.1(a), at any time following the earlier~~ a Schedule 14D-9 (or successor form of ~~(x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange~~ by the Company recommending that stockholders accept any such offer ~~which, if consummated, would result in~~ filed after such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each caseoffer has commenced, the Investor ~~Affiliates will~~ shall not be ~~entitled to commence and accept~~ prohibited from taking any of the actions otherwise prohibited by this Section 5.1 for ~~purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer~~ so long as the Board of Directors maintains and does not withdraw such ~~tender~~ recommendation; (v) directly or ~~exchange offer (such tender~~ indirectly, knowingly solicit proxies or ~~exchange offer meeting the requirements set forth~~ consents or become a participant in ~~this Section 1.1(b),~~ a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof solicitation (as ~~determined using Rule 14d-1(g)(3)~~ such terms are defined in Regulation 14A under the Exchange Act); ; (ivvi) ~~is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that,~~ publicly propose (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B1) any ~~conditions to the consummation of such offer may be waived by the Investor in its sole discretion~~merger, ~~other than~~consolidation, ~~in the event no Third Party Offer is outstanding or is made~~business combination, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, ~~merger~~ purchase of the Company’s assets or ~~other business combination involving Issuer~~ businesses or any ~~of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination~~ similar transaction involving the ~~Issuer or any Subsidiary thereof~~ Company or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~2) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to ~~Issuer or any of its Subsidiaries; (ii) except as provided~~ the Company, in ~~Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under~~ each case without the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members prior written consent of the ~~Issuer~~ Board (a transaction described in clauses (1) and ~~any committees thereof in their capacity as such or~~ (B2) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate that would result in a ~~13D Group or otherwise~~ Change of Control, is referred to as a “Business Combination”); (vii) knowingly act in concert with any ~~Person, in each case, with respect~~ Third Party to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action ~~which would~~ in clauses (i) through (vi) above; (viii) make any public announcement regarding, or take any action that would reasonably be expected to ~~force Issuer~~ require the Company to make a public announcement ~~regarding~~ regarding, a potential Business Combination or any of the ~~types of~~ matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) through (vii) above; or (iiix) ~~of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply~~ enter into any arrangements or agreements with any Person relating to the ~~Investor, then,~~ foregoing actions referred to in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or through (vii) above; provided, however, that nothing contained in this Section 5.1 shall prohibit the ~~Issuer~~ Investor or any ~~material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation~~of their Affiliates from making confidential, ~~reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent~~ non-public proposals to the ~~institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment~~ Board of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsDirectors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Investor Rights Agreement (Tpi Composites, Inc), Investor Rights Agreement (Tpi Composites, Inc)

Standstill. During the period (asuch period, the “Standstill Term”) ~~From~~ from and after the date ~~hereof~~of this Agreement until the later of (A) the fifth (5th) anniversary of the expiration or earlier termination of the “Term” (as such term is defined in the Aventis Collaboration Agreement) and (B) the fifth (5th) anniversary of the expiration or earlier termination of the “Term” (as such term is defined in the Sanofi License and Collaboration Agreement), neither the Purchaser Parties nor any of their respective Affiliates (collectively, the ~~Investor will not~~“Standstill Parties”) shall, directly or indirectly (and the Purchaser Parties shall cause their respective Affiliates not to) and will ~~cause each Investor Affiliate~~ not encourage or assist others to, except as expressly invited in writing by the Company: (a) directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 4.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership~~ shares constituting Shares of ~~Issuer~~ Then Outstanding Common Stock ~~(i) pursuant to~~ is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of ~~any stock splits~~a repurchase of Shares of Then Outstanding Common Stock, stock ~~dividends~~ split, stock dividend or ~~other distributions or recapitalizations or similar offerings made generally available by~~ a recapitalization of the ~~Issuer or~~ Company, the Standstill Parties shall not be required to dispose of any ~~Subsidiary thereof to holders~~ of ~~Issuer~~ their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or ~~other equity securities~~ indirectly, seek to have called any meeting of the ~~Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities~~ stockholders of the ~~Issuer) as a result~~ Company, propose or nominate for election to the Company’s Board of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender~~ Directors or ~~exchange offer which, if consummated, would result~~ cause to be voted in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect favor of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror~~ person for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as election to the ~~terms~~ Company’s Board of ~~such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares~~ Directors any Shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Then Outstanding Common Stock; (~~iii~~c) ~~will expire no earlier than midnight~~directly or indirectly, ~~New York City time~~encourage or support a tender, on exchange or other offer or proposal by any other Person or group (an “Offeror”) the ~~twentieth~~ consummation of which would result in a Change of Control of the Company (~~20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act~~an “Acquisition Proposal”); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ~~of, any Issuer~~ of such Shares of Then Outstanding Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesStock; (~~iii~~f) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (e) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group~~ “partnership, limited partnership, syndicate, or ~~otherwise act in concert~~ other group” within the meaning of Section 13(d)(3) of the Exchange Act. (g) enter into discussions, negotiations, arrangements or agreements with any ~~Person, in each case, with respect~~ Person relating to the ~~Issuer Common Stock, or seek, propose or otherwise act alone or~~ foregoing actions referred to in ~~concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict~~ (xa) ~~the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and~~ through (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (ie) above; (vh) ~~bring~~ request or propose in writing to the Company’s Board of Directors, any ~~action~~member(s) thereof or any officer of the Company that the Company amend, waive, or ~~otherwise act, to contest~~ consider the ~~validity of this Section 1.1(d); or (vi) enter into any discussions~~ amendment or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubtwaiver of, any ~~tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions~~ provisions set forth in this Section ~~1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (~~4.1; provided, ~~that~~however, in that the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply mere voting in accordance with ~~their terms, until terminated pursuant to~~ Section ~~1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ 6 hereof of any voting securities of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated Company held by the ~~Investor to be elected~~ Purchaser Parties or ~~appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x)~~ their Affiliates shall not ~~appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate~~ constitute a violation of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of ~~the foregoing shall be entered; or~~ clauses (~~vii~~a) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. through (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreementabove. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Investor Agreement, Investor Agreement (Regeneron Pharmaceuticals Inc)

Standstill. ~~(a) From and after~~ Section 4.1. During the ~~date hereof~~Standstill Period, the ~~Investor will~~ Stockholder shall not~~, and will cause each Investor Affiliate not to~~, directly or indirectly, ~~acquire Beneficial Ownership~~ and shall cause its Representatives (to the extent acting on behalf of ~~shares of Issuer Common Stock~~the Stockholder) and Group Members directly or indirectly not to, ~~including for purposes of this~~ without the prior written consent of, or waiver by, the Company: (a) subject to Section ~~1.1(a)~~4.2, ~~rights~~acquire, ~~options~~ offer or ~~other derivative securities or contracts or instruments~~ seek to acquire, agree to acquire or make a proposal (including any private proposal to the Company or the Board of Directors) to acquire, by purchase or otherwise, any securities (including any Equity Securities or Voting Securities, but excluding debt securities) or Derivative Instruments, or direct or indirect rights to acquire any securities (including any Equity Securities or Voting Securities, but excluding debt securities) or Derivative Instruments, of the Company or any Subsidiary or Affiliate of the Company, or any securities (including any Equity Securities or Voting Securities, but excluding debt securities) or indebtedness convertible into or exchangeable for any such ~~ownership~~ securities; provided that ~~derive their value~~ the Stockholder may acquire, offer or seek to acquire, agree to acquire or make a proposal to acquire Shares (~~in whole~~ and any securities (including any Equity Securities or ~~in part~~Voting Securities, but excluding debt securities) ~~from such Issuer Common Stock~~convertible into or exchangeable for Shares) and Derivative Instruments, if, ~~after giving effect to~~ immediately following such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of collective Beneficial Ownership of ~~Issuer Common Stock (i) pursuant~~ Shares of the Stockholder and its Group Members, as a group, would not exceed the Standstill Level; provided that nothing in this Agreement, including in this Section 4.1(a), shall prohibit the Stockholder or any of its Group Members from making a non-public offer to the ~~Purchase Agreement (unless, for~~ Board of Directors so long as the ~~avoidance~~ Stockholder or such Group Member reasonably believes that such offer will not result in the Company or the Stockholder or their Affiliates being required by applicable law to disclose the making of ~~doubt,~~ such offer promptly following the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors.making thereof; (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, ~~a “Third Party Offer”)~~or seek to acquire, unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause fund or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of ~~any Issuer Common Stock (~~assets or ~~Beneficial Ownership thereof) or any material portion~~ business of the ~~assets of Issuer~~ Company and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (iic) ~~except~~ conduct, fund or otherwise become a participant in any “tender offer” (as ~~provided~~ such term is used in ~~Article 3~~Regulation 14D under the Exchange Act) involving Equity Securities, Voting Securities or any securities convertible into, or exercisable or exchangeable for, Equity Securities or Voting Securities, in each case not approved by the Board of Directors; (d) otherwise act in concert with others to seek to change, control or influence the Board of Directors or stockholders, policies or management of the Company or its Subsidiaries or Affiliates; (e) make or ~~participate in, directly~~ join or ~~indirectly,~~ become a participant (as defined in Instruction 3 to Item 4 of Schedule 14A under the Exchange Act) in (or encourage) any “solicitation” of “proxies” (as such terms are defined ~~under~~ in Regulation 14A ~~under~~ as promulgated by the ~~Exchange Act) to vote~~SEC), or ~~seek~~ consent to vote any Voting Securities or any of the voting securities of any Subsidiaries or Affiliates of the Company (including through action by written consent), or otherwise knowingly advise or influence any Person ~~or entity~~ with respect to the voting ofof any securities of the Company or its Subsidiaries or Affiliates; (f) make any public announcement with respect to, or solicit or submit a proposal for, or offer, seek, publicly propose or indicate an interest in (with or without conditions) or fund any merger, consolidation, business combination, “tender offer” (as such term is used in Regulation 14D under the Exchange Act), recapitalization, reorganization, purchase or license of a material portion of the assets, properties, securities or indebtedness of the Company or any Subsidiary or Affiliate of the Company, or other similar extraordinary transaction involving the Company, any ~~Issuer Common Stock~~ Subsidiary of the Company or any ~~demand for a copy~~ of ~~Issuer’s stock ledger~~its securities or indebtedness, ~~list of stockholders~~ or enter into any discussions, negotiations, arrangements, understandings or agreements (whether written or oral) with any other ~~books and records~~ Person regarding any of ~~Issuer~~ the foregoing; (g) seek the election of or seek or acquire right to appoint or place a representative on the Board of Directors or seek the removal of any director from the Board of Directors; (h) form, join, become a member or otherwise participate in a Group (other than with the Stockholder, any of its Group Members or any counterparty (other than a Prohibited Transferee) in connection with a Hedging Arrangement that complies with Section 2.1(c)(iv)) with respect to ~~matters related to~~ the ~~Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ securities of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer Company or any ~~Subsidiary thereof~~ of its Subsidiaries or ~~(y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules~~Affiliates; (~~iii~~i) ~~call or seek to call a meeting of Issuer’s stockholders or initiate~~ deposit any ~~stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate~~ Voting Securities in a ~~13D Group~~ voting trust or ~~otherwise act in concert~~ similar Contract or subject any Voting Securities to any voting agreement, pooling arrangement or similar arrangement or Contract, or grant any proxy with respect to any ~~Person,~~ Voting Securities (in each case, other than (i) with ~~respect to~~ the ~~Issuer Common Stock~~Stockholder or any of its wholly-owned Subsidiaries, (ii) as part of a Hedging Arrangement that complies with Section 2.1(c)(iv) or ~~seek, propose or otherwise act alone or~~ (iii) in ~~concert~~ accordance with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section ~~1.1(d)(ii)(B~~3.1); (ivj) make any proposal or disclose any plan, or cause or authorize any of its and their directors, officers, employees, agents, advisors and other Representatives to make any public proposal or disclose any plan on its or their behalf, inconsistent with the foregoing restrictions; (k) knowingly take any action ~~which would~~ or cause or authorize any of its and their directors, officers, employees, agents, advisors and other Representatives to take any action on its or their behalf, that would reasonably be expected to ~~force Issuer~~ require the Company or any of its Subsidiaries or Affiliates to ~~make a public announcement regarding~~ publicly disclose any of the ~~types~~ foregoing actions or the possibility of ~~matters set forth~~ a business combination, merger or other type of transaction or matter described in ~~clause (i) above~~this Section 4.1; (vl) ~~bring any action~~knowingly advise, assist, arrange or otherwise ~~act, to contest the validity of this Section 1.1(d); or (vi)~~ enter into any discussions or arrangements with any third party with respect to any of the ~~foregoing~~ foregoing; or (~~except as otherwise expressly provided herein~~m) directly or indirectly, contest the validity of, any provision of this Section 4.1 (including this subclause) or Section 3.1 (whether by legal action or otherwise). ~~(e) Unless earlier terminated or made inapplicable pursuant~~ Section 4.2. Notwithstanding anything herein to ~~Section 1.1(f)~~the contrary, the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth prohibition in Section ~~1.1(d) (other than the provisions of Section 1.1(d)(i)~~4.1(a) shall not apply to the activities of the Stockholder or any of its Group Members in connection with: (a) acquisitions made as a result of a stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change approved or recommended by the Board of Directors; or (b) acquisitions made in connection with a transaction or series of related transactions in which the Stockholder or any of its Group Members acquires a previously unaffiliated business entity that Beneficially Owns Equity Securities, Voting Securities or Derivative Instruments, or any securities convertible into, or exercisable or exchangeable for, Equity Securities, Voting Securities or Derivative Instruments, at the time of the consummation of such acquisition. Notwithstanding anything herein to the contrary, the prohibition in Section 4.1(a) shall immediately terminate, and the ~~Investor will be permitted to take the actions otherwise prohibited thereunder) if~~ Stockholder and its Affiliates may engage in any of the ~~following occurs (provided, that~~activities specified in Section 4.1, in the event that (a) the Company publicly announces that it has entered into an agreement with any ~~matter described in clauses~~ Person or Group which provides for (i) the acquisition by such person or group of more than 50% of the Common Stock or all or a majority of the assets of the Company or (ii) any merger, consolidation or similar business combination, including as a result of ~~this Section 1.1(f~~a stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change; involving the Company and such Person or Group (each, a “Third Party Acquisition”); (b) ~~has occurred and resulted in~~ the ~~restrictions imposed under Section 1.1(d) (other than the provisions~~ Board of ~~Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months~~ Directors recommends that stockholders of the ~~date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth~~ Company tender their shares of Common Stock or vote in ~~Section 1.1(d~~favor of a Third Party Acquisition; or (c) ~~shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e)~~ any Person or ~~subsequently made inapplicable pursuant to this Section 1.1(f)):~~ Group (i) ~~in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ acquires Beneficial Ownership of more than 50% of the ~~Issuer~~ outstanding Common Stock ~~is commenced~~ , (~~within the meaning of Section 14(d~~ii) ~~of the Exchange Act) by a third Person which, for the avoidance of doubt, is not~~ makes an ~~Investor Affiliate (and not involving any breach of Section 1.1(d))~~ offer which ~~tender offer or exchange offer,~~ if ~~consummated,~~ fully subscribed would result in such ~~third party (~~Person or ~~any 13D~~ Group acquiring Beneficial Ownership of ~~which such third party is a member) becoming the Beneficial Owner of securities representing greater~~ more than ~~either thirty-five percent (35%)~~ 50% of the outstanding ~~shares of Issuer~~ Common Stock , or ~~thirty-five percent~~ (~~35%~~iii) publicly announces an intention to engage in a Third Party Acquisition, and, in the case of clause (ii) or (iii), the ~~voting power of the Issuer~~Company does not, ~~and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer~~ within ten (10) ~~days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders~~ Business Days of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement thereof by such Person or Group, publicly oppose and/or recommend to its stockholders that ~~it is seeking to sell itself and, in~~ they not accept such ~~event,~~ offer or support such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering Third Party Acquisition. Notwithstanding any of the ~~foregoing~~ foregoing, nothing in this Agreement shall ~~be entered; or (vii)~~ restrict any of the ~~Issuer~~ Stockholder’s Representatives from effecting or ~~any material Subsidiary shall~~ recommending transactions in securities (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of its business as an investment advisor, broker, dealer in securities, market maker, specialist or block positioner and (iiB) not at the ~~Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board~~ direct or ~~management~~ request of the ~~Issuer with respect to such proposed transaction~~ Stockholder or ~~a competing proposal by the Investor~~any of its Affiliates.

Appears in 2 contracts

Samples: Stockholders Agreement (Colfax CORP), Stockholders Agreement (Circor International Inc)

Standstill. (a) ~~From and after~~ During the period commencing on the date ~~hereof~~hereof and ending on the second anniversary of the date hereof (the “Share Acquisition Period”), without the prior consent of a majority of the Continuing Directors, neither the Stockholder nor any of its Affiliates shall acquire, or propose to acquire, “beneficial ownership” (as defined in Section 13(d) of the Exchange Act) of any equity securities, or rights or options to acquire any such securities (through purchase, exchange, conversion or otherwise), of the Company, including derivative securities representing the right to vote or economic benefits of any such securities, provided that the Stockholder and its Affiliates shall be permitted to acquire an additional 1,405,374 shares of Common Stock of the Company (as adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction prior to the expiration of the Share Acquisition Period) (the “Additional Shares”), provided, further, that the Stockholder and its Affiliates ownership in the outstanding Common Stock of the Company shall not exceed thirty percent (30%) of the then outstanding Common Stock when combined with other Equity Interests of the Company beneficially owned by HNH, the ~~Investor will not, and will cause each Investor Affiliate not to, directly~~ Stockholder or ~~indirectly, acquire Beneficial Ownership~~ any of ~~shares~~ their respective Affiliates as of ~~Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value~~ the date hereof (~~in whole or in part) from such Issuer Common Stock, if,~~ after giving effect to the transactions contemplated by the Investment Agreement (excluding the issuance or exercise of the Warrants)) (which, for purposes of such ~~acquisition~~calculation, shall include shares of Common Stock issuable upon conversion of then-outstanding preferred stock) (the ~~Investor’s Investor Percentage Interest would exceed~~ “30% Cap”) during the ~~Cap;~~ Share Acquisition Period, provided, however, ~~that such restriction on acquisitions will not~~ that, notwithstanding the foregoing restrictions (including, without limitation, the 30% Cap), the Stockholder and its Affiliates (including HNH) shall be ~~applicable with respect~~ permitted to ~~the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock~~ acquire (i) the Additional Shares, (ii) the Common Stock underlying the Warrants set forth and in accordance with the terms of the Warrants and (iii) securities as a result of, or offered pursuant to, any share division or split, share consolidation, stock/share dividend or equivalent under Delaware law, combination, recapitalization, rights offering or similar events. Notwithstanding the foregoing, in the event that the number of outstanding shares of Common Stock is either increased or decreased (other than in the case of buy-back of Common Stock made available by the Company to all of the stockholders of the Company) after the date hereof (other than in connection with the exercise of the Warrants), the number of Additional Shares that the Stockholder and its Affiliates shall be permitted to acquire shall be increased or decreased, as applicable, proportionate to the increase or decrease, as applicable, in total outstanding shares of Common Stock. (b) In addition to the waiver granted by the Board under Section 203 of the Delaware General Corporation Law referenced in Section 3.2(c) of the Investment Agreement (and effective as of the consummation of the issuance of Common Stock and the Warrant contemplated by the Investment Agreement), the Stockholder hereby formally requests and the Board has granted a waiver and exemption to the Stockholder and its Affiliates under and in accordance with that certain Tax Benefit Preservation Plan, dated as of October 17, 2011, between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, as amended by Amendment No. 1 to Tax Benefit Preservation Plan, dated as of March 21, 2012, by and between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Tax Plan”), and otherwise modified that certain Rights Agreement, dated as of March 21, 2012, between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Plan”, and together with the Tax Plan, the “Rights Agreements”) (and which waivers, exemptions and modifications shall terminate and revert back, as applicable, automatically in the event this Agreement or the Investment Agreement are terminated prior to the consummation of the issuance of such Common Stock and Warrant), to permit (x) the entering into of this Agreement and the Investment Agreement, and (y) subject to the consummation of the issuance of Common Stock and the Warrant contemplated by the Investment Agreement, the acquisition of the securities permitted to be acquired pursuant to ~~the Purchase Agreement (unless~~Section 5(a), provided that for the avoidance of doubt, such waivers, exemptions and modifications to the ~~representation~~ Rights Agreements, as applicable, shall not expire upon expiration of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~Share Acquisition Period as they relate to the acquisition of the Additional Shares, ~~(ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by~~ the ~~Issuer or any Subsidiary thereof to holders of Issuer~~ Common Stock underlying the Warrants (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth ~~in this Section 1.1(b), a “Permitted Offer”): (i) is commenced~~ and ~~made~~ in accordance with the ~~applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3~~ terms of the ~~Exchange Act~~ Warrants) and ~~the related rules and regulations applicable thereto; (ii) is made~~ any securities acquired pursuant to ~~all holders of Issuer Common Stock;~~ subclause (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer5(a). (c) In Notwithstanding anything in this Agreement to the contrary, in no event shall the ~~Investor~~ Stockholder and its Affiliates ~~make a Permitted Offer~~be permitted to acquire shares of Common Stock or other securities or instruments in accordance with Section 5(a) that would result in an “ownership change” of the Company for purposes of Section 382 of the Internal Revenue Code of 1986, ~~the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer~~as amended. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any ~~tolling of~~ such ~~restrictions pursuant to Section 1.1(f) will~~ waiver shall not ~~result in any extension~~ restrict the ability of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any majority of the ~~following occurs~~ members of the Continuing Directors Committee or, if there are less than three (~~provided~~3) Continuing Directors, ~~that, in~~ the ~~event any matter described in clauses (i) or (ii)~~ majority of ~~this Section 1.1(f) has occurred~~ the directors on the Board who are independent and ~~resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related~~ disinterested as to such ~~matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued~~ matters at such time, ~~the restrictions set forth~~ to put in ~~Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms~~a place, ~~until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)):~~ a new stockholders’ rights plan (~~i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock~~ which authority is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response hereby irrevocably devolved to such ~~offer~~ Continuing Directors Committee and directors), provided that such new plan continues to permit the Stockholder and its Affiliates to purchase the additional securities permitted by this Agreement under Section 5(a) during or ~~does not recommend against~~ following the ~~tender offer or exchange offer within ten~~ Share Acquisition Period (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Personsincluding, ~~or enters into substantive discussions with one or more Persons regarding, a proposal~~ with respect to ~~a Change of Control Transaction, or~~ the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each caseWarrants, at ~~least ten (10) days~~ all times prior to the ~~execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement~~expiration thereof). (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Settlement Agreement (ModusLink Global Solutions Inc), Settlement Agreement (Handy & Harman Ltd.)

Standstill. 3.1 For a period of three (a3) ~~From and after~~ years from the ~~date hereof~~Closing Date (the Standstill Period), ~~the~~ Investor will not, and will cause ~~each Investor Affiliate~~ its Affiliates not to, without the prior written approval of the Company or as otherwise provided in this Section 3, directly or indirectly, (x) purchase or acquire ~~Beneficial~~ Qualified Securities, or (y) commence a Public Offer if, in either case, the consummation of such purchase or acquisition or Public Offer would result in Investor and its Affiliates in the aggregate Beneficially Owning (assuming the exercise, exchange or conversion of all securities exercisable or exchangeable for or convertible into or otherwise giving the holder thereof any rights in respect of Company Voting Securities held by them), directly or indirectly, greater than 18% of the issued and outstanding Company Voting Securities (assuming the exercise, exchange or conversion of all securities exercisable or exchangeable for or convertible into or otherwise giving the holder thereof any rights in respect of Company Voting Securities held by Investor and its Affiliates) (the Ownership Limit); provided that no purchase or acquisition of ~~shares~~ Qualified Securities shall be deemed to occur solely due to (a) an exchange of ~~Issuer Common Stock~~Ordinary Shares for ADS or ADS for Ordinary Shares, ~~including~~ a stock split, reverse stock split, reclassification, reorganization or other transaction by the Company affecting the Company Voting Securities generally, (b) a stock dividend or other pro rata distribution by the Company to holders of the outstanding Company Voting Securities or (c) any other change in the outstanding number of Company Voting Securities; and provided further that nothing in clause (y) above shall prevent Investor or any Affiliate of Investor from communicating with the Company to request permission to make a Public Offer or negotiate the terms of a Public Offer so long as neither the fact that such communication or request has been made or any of the terms thereof or facts with respect thereto are publicly disclosed, directly or indirectly, by Investor or any of its Affiliates prior to the time any such Public Offer is publicly announced by the Company and Investor for the first time (eerste aankondiging) in accordance with the Dutch public offer rules. 3.2 For the avoidance of doubt and notwithstanding anything in Section 3.1 to the contrary, nothing in this Section 3 shall prohibit, limit or restrict Investor and its Affiliates from exercising their respective rights, performing their respective obligations or otherwise consummating the transactions contemplated by this Agreement or the other Transaction Documents, in each case in accordance with the terms thereof. 3.3 Notwithstanding anything in Section 3.1 to the contrary, nothing in this Section 3 shall prohibit Investor or any of its Affiliates from acquiring any Qualified Securities or the securities of any successor to or person in control of the Company by or through (i) a diversified mutual or pension fund managed by an independent investment adviser or pension plan established for the benefit of Investor’s or any of its Affiliates’ employees or (ii) any 401(k) or similar bona fide benefit plan maintained for the benefit of employees of Investor or any of its Affiliates (and, in the case of subsections (i) and (ii) of this sentence, any such Qualified Securities shall not be considered Beneficially Owned by Investor for purposes of determining whether the Ownership Limit has been or would be exceeded for any and all purposes of this ~~Section 1.1(a~~Agreement); provided that, ~~rights~~in each case, ~~options~~ neither Investor nor any of its Affiliates shall in any way request or direct that the trustee or other ~~derivative~~ administrator of such plan purchase or acquire any Qualified Securities. Further, nothing herein shall prevent Investor or any of its Affiliates from acquiring securities of, or ~~contracts~~ from entering into any merger or ~~instruments~~ other business combination with, another person that Beneficially Owns any Qualified Securities or the securities of any successor to ~~acquire such ownership that derive their value (~~or person in ~~whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition,~~ control of the ~~Investor’s Investor Percentage Interest would exceed the Cap~~Company; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ~~ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in~~ such ~~Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (~~person shall have acquired such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock Qualified Securities or other securities ~~of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined~~ other than in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf contemplation of Investor or any ~~Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect~~of its Affiliates acquiring the securities of, or ~~announce~~ entering into any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, such merger or other business combination ~~involving Issuer~~ with, such person and (y) the Beneficial Ownership of such Qualified Securities or other securities by such person shall not be a primary reason for Investor or any of its ~~Subsidiaries (provided~~Affiliates acquiring the securities of, ~~that, this clause does not restrict~~ or entering into any ~~Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer,~~ such merger or other business combination ~~involving~~ with, such person. 3.4 The Standstill Period will terminate and the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity provisions of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) 3 will ~~terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result~~ no longer be in ~~any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (~~force and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) effect in the event that ~~a tender offer or exchange offer for at least thirty-five percent~~ (~~35%~~i) ~~of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by~~ a third ~~Person which~~party publicly announces (eerste aankondiging) or makes (uitbrengen) a Public Offer, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) ~~the Issuer solicits from one~~ a third party, or a group of third parties acting in concert, acquires 18% or more ~~Persons~~of the issued and outstanding Qualified Securities, in each case without the consent or ~~enters~~ recommendation of the management board or supervisory board of the Company, (iii) the Company intends to enter into ~~substantive discussions with one~~ or ~~more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement~~ publicly announces that it is ~~seeking to sell itself and~~considering a Business Combination Transaction or a Business Combination Proposal, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the ~~Investor Percentage Interest is less than ten percent (10%);~~ Company enters into a definitive agreement providing for a Business Combination Transaction or (v) the ~~Investor Percentage Interest is greater~~ Flu-Mab Agreement and the Innovation Agreement are terminated (other than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of as a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale result of a material ~~portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g~~breach by Investor), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Shareholder Agreement (Johnson & Johnson), Shareholder Agreement (Crucell Nv)

Standstill. (a) ~~From and after~~ Without the ~~date hereof~~prior written consent of the Board specifically expressed in a written resolution adopted by a majority vote of the entire Board, ~~the Investor~~ TRT will not, and will cause each ~~Investor Affiliate~~ TRT Controlled Party and each of TRT’s and the TRT Controlled Parties’ Representatives (provided, that the restrictions in this Section 3 will not apply to actions of Representatives not acting for or on behalf of TRT or any TRT Controlled Party) not to, directly or indirectly, ~~acquire Beneficial Ownership~~ do any of ~~shares of Issuer Common Stock, including for purposes~~ the following during the period beginning on the date of this ~~Section 1.1(a~~Agreement and continuing until the Termination Date: (1) acquire, offer or propose to acquire, or agree to acquire (except by way of stock dividends or other distributions), ~~rights~~directly or indirectly, ~~options~~ whether by purchase, tender or exchange offer, through the acquisition of control of another Person, by joining a partnership, limited partnership, syndicate or other ~~derivative securities~~ “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), or ~~contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock~~otherwise, any Voting Securities, if, after giving effect to such acquisition, TRT (together with all controlled Affiliates and controlled Associates of TRT) would Beneficially Own 22% or more of the ~~Investor’s Investor Percentage Interest would exceed the Cap~~outstanding Voting Securities; provided, however, that neither TRT nor any TRT Controlled Party will be deemed to be in breach of this provision if the increase in the beneficial ownership of Voting Securities to 22% or more of the outstanding Voting Securities results from a reduction in the number of outstanding Voting Securities (provided that after such ~~restriction on acquisitions~~ reduction neither TRT nor any TRT Controlled Party becomes the Beneficial Owner of any additional Voting Securities in violation of this Section 3(a)(1) at a time when such parties Beneficially Own 22% or more of the outstanding Voting Securities) or if the Board determines in good faith that the accumulation by TRT or any TRT Controlled Party of Voting Securities in excess of such 22% threshold was inadvertent (provided that TRT or the applicable TRT Controlled Party, as the case may be, will promptly divest a sufficient number of Voting Securities in accordance with Section 4 so that TRT or such TRT Controlled Party would no longer Beneficially Own 22% or more of the Voting Securities then outstanding, it being understood that for the purposes of computing the Beneficial Ownership of TRT or any TRT Controlled Party at the time of any purchase, the number of outstanding Voting Securities will be determined by the amount of such outstanding Voting Securities reported in the latest available Company filing with the SEC, subject to any adjustment for any stock dividends, combinations or splits after the date of the filing and subject to adjustment to include the number of such securities not then actually issued and outstanding which TRT or such TRT Controlled Party would be ~~applicable~~ deemed to Beneficially Own under this Agreement pursuant to Section 11(a)(3) (but specifically excluding any Voting Securities issued or awarded to Rowling by the Company due to his service as a director of the Company); (2) engage, or in any way participate, directly or indirectly, in any “solicitation” (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) of proxies or consents (whether or not relating to the election or removal of directors), seek to advise, encourage, or influence any Person with respect to the ~~acquisition~~ voting of any Voting Securities (including in connection with the election of directors), in each case in opposition to a recommendation of the Board; initiate, propose or otherwise “solicit” (as such term is defined in Rule 14a-1(l) promulgated by the ~~Investor~~ SEC under the Exchange Act) stockholders of the Company for the approval of stockholder proposals, whether made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act or otherwise, in opposition to the recommendation of the Board; initiate or propose any stockholder proposal, whether made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act or otherwise, or otherwise seek the election or appointment to, or representation on, or the nomination of any candidate to, the Board except as expressly permitted by this Agreement; effect or attempt to effect the removal of any members of the Board, excluding any TRT Nominees; or induce or attempt to induce any other Person to initiate any such stockholder proposal; provided, however, that nothing in this Agreement will limit the ability of TRT or any TRT Controlled Party to issue any communication contemplated by Rule 14a-1(l)(2)(iv) stating how TRT or such TRT Controlled Party intend to vote and the reasons therefor with respect to any Extraordinary Transaction of any kind or nature between the Company and any Third Party; (3) (x) seek, propose, or make any statements to any Third Party with respect to, any Extraordinary Transaction, other than in connection with any action by TRT or any TRT Controlled Party otherwise permitted by this Section 3, or (y) acquire, offer or propose to acquire, or agree to acquire, ownership of any of the assets, indebtedness or businesses of the Company or any of its Affiliates ~~of Beneficial Ownership of Issuer Common Stock~~ other than in connection with any action by TRT or any TRT Controlled Party otherwise permitted by this Section 3; provided, however, that nothing in this Section (3)(a)(3) will prohibit TRT or any TRT Controlled Party from (i) ~~pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ owning any Bonds that are owned by TRT or any TRT Controlled Party as of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~date of this Agreement, or (ii) acquiring or agreeing to acquire any Bonds or other publicly traded indebtedness of the Company, unless and to the extent all directors of the Company are restricted from acquiring or agreeing to acquire Bonds or other publicly traded indebtedness of the Company under any policy or agreement of the Company disclosed to the directors of the Company; (4) form, join, or in any way participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting Securities in connection with any “election contest” with respect to the Company’s directors, other than a “group” that (x) includes all or some lesser number of the Persons identified as ~~a result~~ “Reporting Persons” (or controlled Affiliates thereof) in the Schedule 13D and the signatories to this Agreement and (y) does not include any other members who are not currently identified as Reporting Persons (or controlled Affiliates thereof) or the signatories to this Agreement; (5) deposit any Voting Securities in any voting trust or subject any Voting Securities to any arrangement or agreement with respect to the voting of any ~~stock splits~~Voting Securities, ~~stock dividends~~ except (x) as expressly set forth in this Agreement, (y) for any such trust, arrangement or ~~other distributions or recapitalizations or similar offerings made generally available~~ agreement solely among TRT and any TRT Controlled Party, and (z) in connection with any action by ~~the Issuer~~ TRT or any ~~Subsidiary thereof~~ TRT Controlled Party otherwise permitted by this Section 3; (6) make any demand to ~~holders of Issuer Common Stock (or other equity securities~~ inspect the books and records of the ~~Issuer)~~Company or its Subsidiaries, including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to ~~a shareholder rights plan or similar plan or agreement, (iii~~Section 220(b) ~~as a result~~ of the ~~exercise~~ DGCL; (7) publicly make any proposal (including publicly disclosing or ~~exchange~~discussing any proposal) of or enter into any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance~~ understandings with a ~~Permitted Offer or (v) which has been approved by a majority~~ Third Party regarding any of the ~~Non-Investor Directors~~foregoing, or publicly make any proposal, statement or inquiry, or publicly disclose any intention, plan, or arrangement (whether written or oral), in each case inconsistent with any of the foregoing, or publicly disclose any request to amend, waive, or terminate any provision of this Agreement; (8) have any discussions or communications, or enter into any arrangements, understanding, or agreements (whether written or oral) with, or advise, finance, assist, induce, or encourage, any Third Party either in connection or inconsistent with any of the foregoing provisions of this Section 3(a); or (9) otherwise take or cause any action inconsistent with any of the foregoing provisions of this Section 3(a). (b) Notwithstanding the foregoing provisions of this Section ~~1.1(a~~3, the parties to this Agreement acknowledge and agree that: (1) subject to Sections 1(h) and 1(k), ~~at any time following the earlier of~~ nothing in this Agreement will (x) ~~ten~~ limit any actions that may be taken by any TRT Nominee acting as a director of the Company consistent with his fiduciary duties or as otherwise required by Legal Requirements, (10y) ~~days following~~ require TRT or any Affiliate of TRT to vote in any way on matters put to stockholders of the ~~date~~ Company for their approval except as expressly set forth in Section 2(c), or (z) in any ~~Third~~ way limit TRT’s, any TRT Controlled Party’s, or any of their respective Affiliates’ ability to privately make suggestions, recommendations, or proposals to the Company, the Board or any of the directors of the Company; (2) nothing in this Agreement will (x) limit the ability of TRT or any TRT Controlled Party ~~commences~~ to acquire, offer or propose to acquire, or agree to acquire Voting Securities or assets of the Company in connection with a transaction contemplated by Section 1(p), or (y) limit the ability of TRT or any TRT Controlled Party to make an offer that meets all of the requirements of a “Qualified Offer” (as such term is defined in the A&R Rights Agreement); (3) the restrictions set forth in this Section 3 will immediately terminate and will be of no further force and effect in the event that either (x) a publicly announced tender or exchange offer for Voting Securities which, when added to the Voting Securities Beneficially Owned by the offering Person and its Affiliates, constitute at least 51% of the Voting Securities of the Company then outstanding, is commenced within the meaning of ~~Section 14(d~~Rule 14d-2(a) of under the Exchange ~~Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock~~ Act by any Third Party (~~or other equity securities) having Majority Voting Power (such offer,~~ a “Third Party Offer”), ~~unless during~~ or (y) any Third Party makes a proposal to the Company or publicly announces a proposal with a view toward the acquisition from the Company or from other Person(s) of Voting Securities of the Company which, when added to the Voting Securities Beneficially Owned by the offering Person and its Affiliates, constitute at least 51% of the Voting Securities of the Company then outstanding or the acquisition of all or substantially all of the assets of the Company (a “Third Party Acquisition”) and, in either such ~~ten~~ case in this clause (~~10) day period~~y), the ~~Issuer~~ Board ~~takes~~ undertakes material, substantive negotiations with such ~~actions~~ Third Party or any other Third Party with a view toward the consummation of such Third Party Acquisition or related transaction; provided, however, that, in the event of a Third Party Offer as ~~are reasonably necessary to prevent~~described in clause (x) above, ~~delay~~upon the date that is 90 days following the consummation, withdrawal or ~~restrict the purchase~~ expiration of ~~Issuer Common Stock (or other equity securities) pursuant to~~ such Third Party Offer, ~~including implementation~~ the exception described in this Section 3(b)(3) will no longer apply and the restrictions set forth in Section 3(a) and any restrictions set forth in this Agreement that have been suspended will be reinstated as binding obligations of ~~a shareholder rights plan~~ TRT and ~~other customary defensive actions, (y) the date Issuer publicly recommends a Third~~ any TRT Controlled Party ~~Offer or takes any action inconsistent~~ in accordance with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of this Agreement unless TRT or any TRT Controlled Party, prior to the expiration of such ~~proposed offer~~90-day period, ~~then in each case,~~ commences within the ~~Investor Affiliates will be entitled to commence and accept for purchase and purchase shares~~ meaning of ~~Issuer Common Stock pursuant to~~ Rule 14d-2(a) under the Exchange Act a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 for Voting Securities which constitute at least 51% of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation Voting Securities of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the Company then outstanding ~~shares of Issuer Common Stock outstanding at the time of commencement~~ that are not Beneficially Owned by TRT or any TRT Controlled Party, or otherwise makes a bona fide, fully-financed proposal to the ~~Investor Affiliates as~~ Company with a view toward consummating an Extraordinary Transaction involving the acquisition of the ~~date such Permitted Offer is commenced, disregarding for purposes~~ Company or the acquisition of ~~calculating~~ all or substantially all of the ~~number~~ outstanding Voting Securities or assets of ~~outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition,~~ the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; andCompany; (v4) ~~provides for consideration payable~~ nothing in ~~cash~~this Agreement will limit the ability of TRT, ~~common stock or other securities of the Investor or a Subsidiary thereof~~any TRT Controlled Party, or ~~a combination thereof; provided, that, such consideration offered has, on a per share~~ any of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective ~~Representatives acting on behalf of Investor~~ Affiliates to vote its Voting Securities or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate engage in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate inparticipate, directly or indirectly, in any “solicitation” (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) of proxies or consents relating to or in connection with a proposed Extraordinary Transaction between the Company and any Person who is not TRT or a TRT Controlled Party that is being submitted to a vote for the stockholders of the Company; provided, however, that TRT and the TRT Controlled Parties may only participate in any “solicitation” of ~~“proxies” (as such terms are defined under Regulation 14A under the Exchange Act)~~ proxies or consents relating to ~~vote,~~ or ~~seek to advise or influence any Person or entity~~ in connection with ~~respect to the voting of, any Issuer Common Stock or any demand for~~ a ~~copy of Issuer’s stock ledger, list of stockholders~~ proposed Extraordinary Transaction if Rowling or any other ~~books and records~~ TRT Nominee that is an Affiliate of ~~Issuer (other than with respect to matters related to the Investor’s exercise~~ TRT or ~~enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating~~ any TRT Controlled Party has voted against such proposed Extraordinary Transaction in their capacity as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules;Board; and (~~iii~~5) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to notwithstanding the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity provisions of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f3(b), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) remaining terms of this ~~Section 1.1(f) has occurred~~ Agreement will remain valid and ~~resulted in the restrictions imposed under Section 1.1(d) (other than the provisions~~ binding obligations of ~~Section 1.1(d)(i)) ceasing to apply to the Investor~~TRT, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply enforceable in accordance with ~~their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in~~ the ~~event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ terms of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsAgreement. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Settlement Agreement (TRT Holdings Inc), Settlement Agreement (Gaylord Entertainment Co /De)

Standstill. 11.1. Restriction on Acquisition by Investor of Company Securities. Investor covenants and agrees with the Company that prior to the tenth anniversary of the Closing Date (aI) ~~From~~ none of Investor's Affiliates except for United States subsidiaries of Investor shall beneficially own (subject to Section 5.7) any Equity of the Company, (II) neither Investor nor its Affiliates shall acquire directly or indirectly any beneficial ownership of any Equity of the Company except as permitted by Articles 2, 3 or 10 of this Agreement and (III) neither Investor nor any of its Affiliates will acquire directly or indirectly beneficial ownership of any additional Equity of the Company such that the Equity beneficially owned by Investor and its Affiliates would represent in the aggregate more than any of the foregoing (x) 10% of the Total Voting Power of the Company, or (y) the Class B Percentage Limitation, or (z) 40% of the outstanding Common Stock (each such percentage described herein as a "Percentage Limitation") unless (i) Investor shall receive from a Major A Stockholder an offer to purchase shares of Class A Stock beneficially owned by such Major A Stockholder pursuant to any rights granted by such Major A Stockholder to Investor in the Stockholders' Agreement, in which event Investor shall be entitled to acquire beneficial ownership from such Major A Stockholder of such additional shares of Class A Stock, and (ii) no later than 60 days after acquisition of beneficial ownership of a majority of the ~~date~~ Total Voting Power of the Company in accordance with the terms hereof, Investor shall be required to make a Permitted Acquisition Proposal. A "Permitted Acquisition Proposal" shall be an Acquisition Proposal (including any proposed tender offer) which: (A) is made to the ~~Investor will not~~Board and, unless and ~~will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a~~until approved in accordance with clause (B), ~~rights, options~~ not made directly to stockholders; (B) is subject to the approval of a majority of the Independent Directors prior to execution of any definitive agreement in connection with a transaction involving the Company or the making of any tender or other ~~derivative securities or contracts or instruments~~ offer to ~~acquire such ownership that derive their value~~ purchase Common Stock from any stockholders who are not Major A Stockholders; and (C) would result, if successful, in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by Investor of beneficial ownership of not less than 100% of the outstanding capital stock of the Company at a price per share not less than the highest price at which Investor ~~Affiliates~~ has acquired (or proposes to acquire in connection with the transaction) beneficial ownership of ~~Beneficial Ownership of Issuer~~ any Common Stock from a Major A Stockholder within the preceding two years and for cash and/or the same form of consideration if other than cash as paid or offered to be paid the Major A Stockholders. 11.1.1. If Investor shall have acquired a majority of the Total Voting Power of the Company, but Investor has not acquired 100% of the outstanding capital stock of the Company, Investor shall: (i) ~~pursuant~~ use all reasonable efforts to assure that at all times thereafter there will be three Independent Directors on the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ Board of the Company until such time as Investor ~~in Section 4.2(d) hereof is not true and correct)~~has acquired 100% of the outstanding capital stock of the Company, and (ii) ~~as a result of any~~ not acquire additional capital stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the ~~Issuer), including rights offerings and distributions made generally~~ Company (other than from a Major A Stockholder) or implement any Acquisition Proposal with regard to ~~holders of Issuer Common Stock~~ the Company or enter into any commercial transaction with the Company (~~or other equity securities~~ not previously in existence) involving a value to the Company as approved in good faith by a majority of the ~~Issuer) as a result~~ Independent Directors of ~~their ownership of Issuer Common Stock (~~less than $1,000,000 unless such offer, Acquisition Proposal or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been commercial transaction is approved by a majority of the ~~Non-~~Independent Directors of the Company. 11.1.2. Neither Investor ~~Directors~~nor any of its Affiliates shall be deemed in violation of the foregoing limitations in Section 11.1 if their beneficial ownership of Equity exceeds such limitation solely as a result of (i) an acquisition of Common Stock by the Company that, by reducing the number of securities outstanding, increases the proportionate amount of Common Stock beneficially owned by Investor and its Affiliates in the aggregate to more than the respective Percentage Limitations of Total Voting Power, Class B Percentage Limitation or Common Stock or (ii) the exercise by third parties of the right to convert Class A Stock into Class B Stock, provided that in each case such limitation shall be deemed crossed if Investor or any of its Affiliates thereafter becomes the beneficial owner of any additional Equity unless (i) Investor shall be permitted to acquire such Common Stock pursuant to Subsection 11.1(i) or (ii), or (ii) upon the consummation of the acquisition of such additional Equity Investor and its Affiliates do not beneficially own in the aggregate more than the applicable respective Percentage Limitations of Total Voting Power, Class B Percentage Limitation or Common Stock outstanding. (bi) ~~Notwithstanding~~ In the ~~provisions~~ event the Company receives an Acquisition Proposal (including an indication of ~~Section 1.1(a), at any time following~~ interest in making such a proposal) from a third party which has not been solicited by the ~~earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer~~ Board and which, if consummated, would result in ~~such Person becoming the Beneficial Owner of Issuer Common Stock~~ a Business Combination (~~or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”~~an "Unsolicited Proposal"), ~~unless during such ten~~ the Company shall promptly notify Investor in writing (10the "Company Notice") ~~day period,~~ of the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the material terms of such ~~proposed offer~~Unsolicited Proposal, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto;including without limitation any specified consideration. (ii) In the event (A) the Board determines to enter into negotiations with regard to an Unsolicited Proposal and the Investor shall not have advised the Company subsequent to the receipt of the Company Notice that it is ~~made~~ not interested in submitting an Investor Proposal (as hereinafter defined), or (B) in the absence of receipt of an Unsolicited Proposal, the Company invites any third party to make an Acquisition Proposal which if consummated would lead to a Business Combination (the "Company Proposal"), then the Company shall also promptly invite the Investor to submit a proposal (an "Investor Proposal") for a Business Combination which would result in the acquisition of an equal or greater amount of assets or shares of Common Stock than the Unsolicited Offer or the Company Proposal (which may include all or substantially all the assets or all of the Common Stock of the Company). Thereafter, if Investor shall have submitted an Investor Proposal, the Company shall conduct the solicitation and negotiation process as an open process available to all ~~holders~~ bidders, including provision to the Investor and other interested parties of ~~Issuer Common Stock;~~further (iii) ~~will expire no earlier than midnight~~Solely for purposes of this Section 11.1.3, ~~New York City time~~a Business Combination shall include a transaction with respect to which the Company receives or solicits from a third party or enters into negotiations with respect to, on a proposal (the ~~twentieth (20th~~"Limited Proposal") business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, which (A) contemplates the acquisition of a portion of the Company's international seed business or the Company's North American seed business that would be equal to or greater in amount than 25% of the average revenues derived from such international or North American seed business, respectively, in the ~~event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding~~Company's most recently completed two fiscal years, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) ~~any conditions to the consummation of such offer may~~ would not otherwise be ~~waived~~ described by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses 11.1.3 (i) or (ii~~) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i~~)~~) ceasing to apply to the Investor~~, ~~then~~provided, ~~in the event the transaction related to such matter has~~ that Investor shall not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will case be entitled to ~~engage in private discussions with, and~~ make ~~private proposals to,~~ a proposal which would involve the ~~Issuer Board~~ acquisition of a greater amount of assets or ~~management of~~ ownership interest than the ~~Issuer with respect to such proposed transaction or a competing proposal by the Investor~~Limited Proposal.

Appears in 2 contracts

Samples: Investment Agreement (Monsanto Co), Investment Agreement (Monsanto Co)

Standstill. During the Lock-Up Term (and, if relevant, during any Extension Period), the Investor agrees that neither it nor any of its Affiliates or Permitted Transferees (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Affiliates not to), except upon any written request for consent from the Investor which is expressly approved, or unless invited in writing by, the Board of Directors of the Company (and the seeking of any such consent shall not of itself amount to a breach hereof) and except as is otherwise contemplated by the terms of this Agreement: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ legal or beneficial ownership of ~~shares~~ Ordinary Shares, or acquire any right or interest in the legal or beneficial ownership of ~~Issuer Common Stock~~Ordinary Shares, ~~including for purposes~~ that would or could reasonably be expected to cause such Standstill Parties to become the legal or beneficial owners of ~~this Section 1.1(a)~~Ordinary Shares, ~~rights~~or make a tender, ~~options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer Common Stock~~Ordinary Shares, ~~if,~~ if after giving effect to such acquisition, such Standstill Parties would beneficially own more than the ~~Investor’s Investor Percentage Interest would exceed the Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by the Investor Affiliates~~ provisions of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in~~ this Section ~~4.2(d) hereof is not true and correct~~3.1(a), ~~(ii)~~ if the number of Ordinary Shares is reduced or if the aggregate ownership of such Standstill Parties is increased as a result of a repurchase by the Company of Ordinary Shares, a share split, dividend or a recapitalization of the Company, the Standstill Parties shall not be required to dispose of any ~~stock splits, stock dividends~~ of their holdings of Ordinary Shares even though such action resulted in the Standstill Parties’ legal or beneficial ownership totaling more than the Standstill Limit; (b) make or publicly promote or publicly support a tender or other ~~distributions~~ offer or ~~recapitalizations~~ proposal by any other Person or ~~similar offerings made generally available by~~ group (an “Offeror”), the ~~Issuer or any Subsidiary thereof to holders~~ consummation of ~~Issuer Common Stock (or other equity securities~~ which would result in a Change of Control of the ~~Issuer~~Company (an “Acquisition Proposal”)~~, including rights offerings and distributions made generally~~ ; (c) solicit in writing proxies or consents (as such terms are defined in Regulation 14A under the Exchange Act) or become a participant in a written solicitation in opposition to ~~holders~~ the recommendation of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at~~ Directors with respect to any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretomatter; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: publicly propose (i) ~~enter into~~ any merger, consolidation, business combination, tender offer, purchase of all or ~~agree, effect~~ substantially all of the Company’s assets or ~~seek, offer or propose (whether publicly or otherwise) to effect~~businesses, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination similar transaction involving the ~~Issuer or any Subsidiary thereof~~ Company or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~ii) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to ~~Issuer or any~~ the Company, in each case, in opposition to the recommendation of ~~its Subsidiaries~~a majority of the Company’s Board of Directors; (iie) ~~except as provided~~ deposit any Ordinary Shares in ~~Article 3, make~~ a voting trust or ~~participate in, directly~~ subject any Ordinary Shares to any arrangement or ~~indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity~~ agreement with respect to the voting ~~of, any Issuer Common Stock or any demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ such Ordinary Shares (other than in connection with ~~respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A~~a Permitted Loan) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except manner that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or ~~would~~ could reasonably be expected to ~~force Issuer~~ allow any Third Party to ~~make a public announcement regarding~~ take any ~~of the types of matters set forth~~ action in ~~clause~~ clauses (ib) through (d) above; (~~v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi~~f) enter into ~~any discussions~~ detailed discussions, negotiations, arrangements or ~~arrangements~~ agreements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) Person (other than the ~~provisions~~ Company) relating to any actions prohibited in clauses (a) through (e) above. provided, however, that the mere voting of ~~Section 1.1(d)(i)) will terminate upon the expiration~~ any voting securities of the ~~Restricted Period. For~~ Company held by the ~~avoidance~~ Investor or its Affiliates and Permitted Transferees, or the mere acceptance of ~~doubt~~a tender, exchange or other offer, shall not constitute a violation of any ~~tolling~~ of ~~such restrictions pursuant to Section 1.1(f~~clauses (a) ~~will not result in any extension of the period referred to in the previous sentence.~~ through (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Investor Agreement (Yandex N.V.), Investor Agreement (Yandex N.V.)

Standstill. (a) ~~From and after~~ During the ~~date hereof~~Designation Period, the ~~Investor will not,~~ Stockholder shall not and ~~will~~ shall cause ~~each Investor Affiliate~~ its Affiliates not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, without the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation prior written consent of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the ~~Non-Investor Directors.~~ entire Board of Directors (~~b) Notwithstanding~~ excluding any representatives or designees of the ~~provisions of Section 1.1(a~~Stockholder), ~~at any time~~ either directly or indirectly (including in a manner willfully designed to circumvent the following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”provisions), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others: (i) in any manner: A. acquire, agree to ~~influence~~ acquire or ~~control Issuer’s management~~make any public proposal to acquire (whether directly or indirectly, ~~the Issuer Board~~ by purchase, tender or ~~policies, except that this subsection does not restrict~~ exchange offer) any material assets of Parent or any subsidiary of Parent; or B. make any Share Acquisition unless (x) after giving effect to the ~~Investor Directors from participating as members~~ Share Acquisition the Stockholder and its Affiliates would Beneficially Own less than 34.5% of the ~~Issuer Board and any committees thereof~~ outstanding shares of Common Stock, with the number of outstanding shares calculated based on the number of shares reported outstanding by Parent in ~~their capacity~~ its most recent quarterly report of Form 10-Q or annual report on Form 10-K, as ~~such~~ filed with the SEC and (y) if the ~~Investor~~ Share Acquisition is to be made during the Section 382 Limitation Period, then (I) the Current Price as of the date of the Share Acquisition is greater than or equal to the Section 382 Threshold Price, (II) the amount of shares to be acquired does not exceed the remaining available Stockholder Buffer Shares (as determined pursuant to Section 4.2(c)), (III) such Share Acquisition is made pursuant to Section 7 of this Agreement, provided that to the extent such Share Acquisition pursuant to this clause (III) would otherwise result in an increase in the percentage of Common Stock of Parent owned by the Stockholder for purposes of Section 382 of the Code, then such portion of the Share Acquisition that would result in such an increase may be effected under this clause (III) only to the extent of the remaining available Stockholder Buffer Shares (as determined pursuant to Section 4.2(c)) or (IV) such Share Acquisition is (X) neither a private acquisition from ~~joining~~ an existing shareholder who is not a 5 Percent Shareholder nor a public acquisition of stock unless it is an acquisition of shares of a class of stock other than the Common Stock and (Y) would not result in an increase in the Aggregate Section 382 Owner Shift (as determined pursuant to Section 4.2(d)); (ii) Transfer any Common Stock, Voting Securities or Derivative Securities of Parent during the Section 382 Limitation Period if both (A) the Current Price as of the date of such Transfer is less than the Section 382 Threshold Price and (B) the transferee is a holder of Parent’s Equity Interests who is not a 5 Percent Shareholder prior to such Transfer but who would become, as a direct result of such Transfer, a 5 Percent Shareholder (any such Transfer, a “Section 382 Transfer”), unless (x) such Section 382 Transfer is made in accordance with Section 4.2(b), (y) the parties otherwise agree in writing not to apply Section 4.2(b) to such Section 382 Transfer or (z) such Section 382 Transfer is pursuant to a tender by the Stockholder of any Common Stock, Voting Securities or Derivative Securities of Parent that it Beneficially Owns pursuant to a tender offer or exchange offer by a third party for such securities that is open to all stockholders of Parent and in all cases subject to Section 4.3 of this Agreement; (iii) (A) propose to any Person or take substantial steps to effect or enter into any business combination, restructuring, recapitalization or the sale or other disposition outside the ordinary course of business of any material asset of Parent or other extraordinary transaction involving Parent or any of its subsidiaries; (B) seek election to or seek to place a representative on the Board of Directors except pursuant to the rights granted pursuant to Section 6 hereof; or (C) solicit proxies or shareholder consents or be a participant in any ~~way participating in a 13D Group~~ such solicitation for the purpose of seeking to control or ~~otherwise acting in concert with any Person, in each case,~~ influence the Board of Directors except pursuant to ~~exercise its~~ the rights ~~under~~ granted pursuant to Section ~~1.1(d)(ii)(B)~~6 hereof; (iv) ~~take~~ form, join or participate in a Group in connection with any ~~action which would~~ of the foregoing (other than a Group consisting of Stockholder and its Affiliates); or (v) make or ~~would reasonably be expected to force Issuer~~ cause Parent to make a public announcement regarding any intention of the ~~types of matters set forth in clause (i) above; (v) bring any action, or otherwise act,~~ Stockholder to ~~contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to~~ take an action which would be prohibited by any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Periodforegoing. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, ~~that~~however, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall ~~be entered; or (vii)~~ not restrict the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion ability of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the InvestorStockholder Designees from exercising their fiduciary duties as directors.

Appears in 2 contracts

Samples: Stockholder Rights Agreement (Level 3 Communications Inc), Stockholder Rights Agreement (Singapore Technologies Telemedia Pte LTD)

Standstill. (a) ~~From and after~~ The Purchaser agrees that until the ~~date hereof~~two-year anniversary of the Closing Date (the “Standstill Termination”), without the prior written approval of the Board, the ~~Investor~~ Purchaser will not, directly or indirectly, and will cause its Affiliates not to, make any short sale of, or enter into any hedging or similar transaction with the same economic effect as a short sale of, any Shares, or otherwise establish or increase, directly or indirectly, a put equivalent position, as defined in Rule 16a-1(h) under the Exchange Act, with respect to any of the Shares (it being agreed that any broad-based index options, broad-based index future, broad-based publicly traded market baskets and trading in (or with respect to) securities of other industry participants shall not be restricted). (b) Except as may be provided by the prior written approval of the Board, the Purchaser agrees that until the Standstill Termination the Purchaser will not, and will cause ~~each Investor Affiliate~~ its Affiliates not to, directly or indirectly, in any manner: (i) acquire, offer or seek to acquire, agree to acquire ~~Beneficial Ownership~~ or make a public proposal to acquire, by purchase or otherwise, any equity securities of ~~shares of Issuer Common Stock~~the Company, ~~including~~ any securities convertible into or exchangeable for ~~purposes of this Section 1.1(a)~~any such equity securities, ~~rights,~~ any options or other derivative securities or contracts or instruments in any way related to ~~acquire such ownership~~ the price of Shares (it being agreed that ~~derive their value~~ any broad-based index options, broad-based index future, broad-based publicly traded market baskets and trading in (~~in whole~~ or ~~in part~~with respect to) ~~from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~securities of other industry participants shall not be restricted); provided, ~~however~~that following the Closing, ~~that such restriction on acquisitions will not be applicable with respect~~ subject to Section 7.2 of the ~~acquisition by the Investor Affiliates~~ Company’s Articles of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless~~Restatement, ~~for the avoidance of doubt~~as amended, the ~~representation of the Investor in Section 4.2(d) hereof is not true~~ Purchaser and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, its Affiliates may acquire additional Shares so long asas the Purchaser and its Affiliates beneficially own, in the ~~case of an action pursuant to this clause (z)~~aggregate, Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 no more than 9.8% of the ~~Exchange Act and the related rules and regulations applicable thereto~~Company’s then-outstanding Shares; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way ~~assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or~~ participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in ~~Article 3, make or participate in, directly or indirectly,~~ any “solicitation” of “proxies” (whether or not relating to the election or removal of directors), as such terms are ~~defined under Regulation 14A under~~ used in the ~~Exchange Act)~~ rules of the SEC, to vote, or knowingly seek to advise or influence any Person ~~or entity~~ with respect to ~~the~~ voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members voting securities of the ~~Issuer Board and any committees thereof in their capacity as such~~ Company or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of ~~Issuer~~the Company’s stockholders or initiate any stockholder proposal ~~for~~ or action by ~~Issuer~~the Company’s stockholders, ~~form~~or seek election to or to place a representative on the Board or seek the removal of any director from the Board; (iii) make any public announcement with respect to, ~~join~~ or in propose any ~~way participate in~~ merger or business combination, tender or exchange offer, recapitalization, reorganization or purchase of a ~~13D Group~~ material portion of the assets, properties or ~~otherwise act in concert~~ securities of the Company or any of its Subsidiaries, or any other extraordinary transaction involving the Company or any of its Subsidiaries, or enter into any arrangements, understandings or agreements with any ~~Person~~other Person regarding any of the foregoing (other than as permitted pursuant to Section 5.06); (iv) otherwise act, ~~in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act~~ alone or in concert with others, to ~~influence~~ seek to control or ~~control Issuer~~influence, in any manner, the management, Board or policies of the Company or any of its Subsidiaries; (v) except as set forth herein, publicly make any proposal to the Company or its management or Board with respect to, or issue any press releases or make any statements which could reasonably be expected to become public with respect to: (A) any change in the number or term of directors or the filling of any vacancies on the Board, (B) any material change in the capitalization or dividend policy of the Company, (C) any other change in the Company’s management, business or corporate structure, (D) any waiver, amendment or modification to the ~~Issuer Board~~ Company Charter Documents, or ~~policies~~other actions which may impede the acquisition of control of the Company by any person in any way whatsoever, ~~except~~ (E) causing a class of securities of the Company to be delisted from, or to cease to be authorized to be quoted on, any securities exchange, or (F) causing a class of equity securities of the Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; (vi) make any request for stock list materials or other books and records of the Company under Maryland law; (vii) make any public proposal or statement of inquiry or publicly disclose any intention, plan or arrangement consistent with the foregoing; (viii) advise, assist, knowingly encourage or direct any Person to do, or to advise, assist, encourage or direct any other Person to do, any of the foregoing; (ix) take any action that ~~this subsection does not restrict~~ would, in effect, require the Company to make a public announcement with respect to any of the foregoing; (x) ~~the Investor Directors from participating as members~~ enter into any arrangements or understandings with any third party (including, without limitation, security holders of the ~~Issuer Board and~~ Company) with respect to any ~~committees thereof in their capacity as such and (y)~~ of the ~~Investor from~~ foregoing, including, without limitation, forming, joining or in any way participating in a ~~13D Group or otherwise acting~~ “group” (as such term is used in ~~concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv~~Sections 13(d) ~~take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any~~ and 14(d) of the ~~types of matters set forth in clause (i~~Exchange Act) ~~above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements~~ with any third party with respect to any of the ~~foregoing (except as otherwise expressly provided herein).~~foregoing; or (exi) ~~Unless earlier terminated~~ request the Company or ~~made inapplicable pursuant~~ any of its Representatives, directly or indirectly, to amend or waive any provision of this Section ~~1.1(f)~~5.02, provided that this clause shall not prohibit the Purchaser from making a confidential request to the Company seeking an amendment or waiver of the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section ~~1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor~~5.02, ~~then, in the event the transaction related to such matter has not occurred within six (6) months of the date on~~ which the ~~Investor was released from such restrictions~~Company may accept or reject in its sole discretion, ~~then~~ so long as any such ~~transaction~~ request is made in a manner that does not ~~being actively pursued at such time~~require public disclosure thereof by the Company and, provided further, that notwithstanding anything to the contrary in this Section 5.02, the ~~restrictions set forth in Section 1.1(d) shall thereafter resume~~ Purchaser and ~~continue~~ its Affiliates may at any time communicate privately with the Company’s directors, officers or advisors or submit to ~~apply in accordance with their terms, until terminated pursuant to Section 1.1(e)~~ the Board one or ~~subsequently made inapplicable pursuant to this Section 1.1(f)):~~ more confidential proposals or offers for a transaction (~~i) in the event that~~ including a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offertransaction that, if consummated, would result in ~~such third party (or any 13D Group~~ a change of ~~which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%)~~ control of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%Company), ~~the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless~~so long as, in each case, ~~at least ten (10) days prior to~~ such communications and submissions are not intended to, and would not reasonably be expected to, require any public disclosure by the ~~execution~~ Company of such ~~agreement~~communications or submissions, ~~the Issuer has given Investor written notice of its intention to enter into such agreement~~as applicable. (hc) ~~Notwithstanding the provisions of~~ The obligations under this Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) 5.02 shall automatically terminate upon a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the InvestorDate.

Appears in 2 contracts

Samples: Investment Agreement (Amherst Single Family Residential Partners VI, LP), Investment Agreement (Front Yard Residential Corp)

Standstill. During the period (such period, the “Standstill Term”) commencing as of the Closing and continuing until the later of (A) the second (2nd) anniversary of the Closing Date, (B) the expiration of the Director Period, and (C) the date on which the Investor and its Affiliates beneficially own less than five percent (5.0%) of the shares of Common Stock then issued and outstanding, the Investor, SK Holdings and SK E&S shall not (and shall cause their respective Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to~~other than Permitted Purchases, directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Common Stock and/or Common Stock Equivalents and/or any instrument that gives the Investor or any of ~~Issuer Common Stock~~its Affiliates the economic equivalent of ownership of an amount of securities of the Company (a “Derivative”); (b) make a tender, ~~including for purposes of this Section 1.1(a), rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock and/or Common Stock Equivalents; (c) directly or indirectly, (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company or propose any matter to be voted upon by the stockholders of the Company, or (ii) ~~as a result of~~ propose or nominate for election to the Board any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~Board (excluding the Designated Director, if any); (bd) ~~Notwithstanding~~ directly or indirectly, encourage, accept or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) for securities of the ~~provisions~~ Company (if such offer or proposal would, if consummated, result in a Change of ~~Section 1.1(a~~Control of the Company, such offer or proposal is referred to as an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange~~ by the Company recommending that stockholders accept any such offer ~~which, if consummated, would result in~~ filed after such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each caseoffer has commenced, the Investor ~~Affiliates will~~ shall not be ~~entitled to commence and accept~~ prohibited from taking any of the actions otherwise prohibited by this Section 3.1(d) for ~~purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer~~ so long as the Board maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (iie) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or propose or seek or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act~~) to vote~~), or seek to advise or influence any ~~Person~~ Person, with respect to voting of any securities of the Company; (f) deposit any securities of the Company in a voting trust or ~~entity~~ subject any securities of the Company to any arrangement or agreement with respect to the voting ofof such securities, including the granting of any ~~Issuer Common Stock~~ proxy; (g) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, purchase of any securities of the Company or any ~~demand for a copy of Issuer’s stock ledger~~Derivative, ~~list of stockholders~~ or any similar transaction involving the Company or (ii) any recapitalization, restructuring, liquidation or other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the ~~Investor’s exercise or enforcement of rights under~~ Company, in each case without the ~~Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ prior written consent of the ~~Issuer~~ Board (a transaction described in clauses (i) and ~~any committees thereof~~ (ii) that would result in ~~their capacity~~ a Change of Control, is referred to as ~~such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of~~ a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules“Business Combination”); (~~iii~~h) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (g) above, or, directly or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders~~indirectly, form, join or in any way participate in a ~~13D Group~~ “partnership, limited partnership, syndicate, or ~~otherwise act~~ other group” as terms are used in ~~concert with any Person, in each case,~~ the rules of the SEC with respect to the ~~Issuer Common Stock,~~ Company or ~~seek,~~ any securities of the Company; (i) request or propose ~~or otherwise act alone or in concert with others,~~ to ~~influence or control Issuer’s management,~~ the ~~Issuer~~ Board or ~~policies~~the Company (or any of its officers, ~~except that~~ directors, Affiliates employees, attorneys, accountants, financial advisors and other professional representatives), directly or indirectly, any amendment or waiver of any provision of this ~~subsection does not restrict~~ Section 3.1 (~~x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and~~ including this clause (~~y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B~~i)); (ivj) make any public announcement regarding, or take any action ~~which would or would reasonably be expected to force Issuer~~ that could require the Company to make a public announcement ~~regarding~~ regarding, a potential Business Combination or any of the ~~types of~~ matters set forth in ~~clause~~ clauses (a) through (i) above~~; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)~~; or (vik) enter into ~~any discussions~~ discussions, negotiations, arrangements or ~~arrangements~~ agreements with any ~~third party with respect~~ Person relating to ~~any of~~ the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period actions referred to in ~~the previous sentence.~~ (fa) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses through (i) ~~or (ii) of~~ above; provided, however, that nothing contained in this Section ~~1.1(f) has occurred and resulted in~~ 3.1 shall prohibit the ~~restrictions imposed under Section 1.1(d) (other than the provisions~~ Investor or any of ~~Section 1.1(d)(i)) ceasing to apply~~ its Affiliates from making confidential, non-public proposals to the ~~Investor, then, in~~ Board for a transaction involving a Business Combination following the ~~event~~ public announcement by the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days Company after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement Closing that it ~~is seeking to sell itself and, in such event, such announcement is made~~ has entered into a definitive agreement with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or Third Party for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in transaction involving a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsBusiness Combination. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 2 contracts

Samples: Investor Agreement (Plug Power Inc), Stock Purchase Agreement (Plug Power Inc)

Standstill. ~~(a) From and after~~ The Investor agrees that during the ~~date hereof~~Standstill Period, without the prior written approval of the Company or the Company Board, or as otherwise expressly permitted or contemplated by this Agreement, the Investor will ~~not,~~ not and will cause ~~each Investor Affiliate~~ its controlled Affiliates not to: 3.1.1 acquire beneficial ownership of any securities (including in derivative form) of the Company or make any tender, ~~directly~~ exchange or ~~indirectly~~other offer for such an acquisition, ~~acquire Beneficial Ownership~~ excluding, in the case of ~~shares~~ the Investor, acquisition of ~~Issuer~~ (a) the Common ~~Stock~~Shares, ~~including~~ (b) subject to the prior consent of the Company (which consent shall be deemed to have been granted if the Company does not affirmatively advise the applicable Investor that the Company withholds such consent within one Trading Day after receiving such request for ~~purposes~~ consent, and which consent may only be withheld if the Company reasonably believes such acquisition of ~~this~~ Capital Stock or other Equity Interests of the Company will be treated as an “ownership change” as defined in Section ~~1.1(a~~382 of the Code), ~~rights, options~~ any Capital Stock or other ~~derivative securities~~ Equity Interests of the Company acquired by the Investor or ~~contracts or instruments to acquire such~~ its controlled Affiliates so long as the total beneficial ownership ~~that derive their value (~~of the Investor and its controlled Affiliates in ~~whole or in part) from such Issuer Common Stock, if~~the Company’s voting securities, after giving effect to such acquisition, would not exceed 25% of the ~~Investor~~Company’s ~~Investor Percentage Interest would exceed~~ total voting power at such time and (c) any securities received from the ~~Cap; provided~~Company by way of dividend or distribution; 3.1.2 directly or indirectly, ~~however, that such restriction on acquisitions will not be applicable with respect~~ (a) seek to have called any meeting of the stockholders of the Company or (b) propose or nominate for election to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is Company Board any person whose nomination has not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the ~~Non-Investor Directors.~~Company Board or cause to be voted in favor of such person for election to the Company Board any Shares of Then Outstanding Common Stock; 3.1.3 directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group the consummation of which would result in a Change of Control (bother than as a seller on the same terms as the other holders of the Company’s Equity Securities) ~~Notwithstanding~~ (an “Business Combination”); provided, however, that from and after the ~~provisions~~ filing of ~~Section 1.1(a), at any time following the earlier~~ a Schedule 14D-9 (or successor form of ~~(x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) by the Company wherein a ~~tender or exchange offer which, if consummated, would result in~~ majority of the Company Board recommend that stockholders accept any such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each caseBusiness Combination, the Investor and its Affiliates ~~will~~ shall not be ~~entitled to commence and accept~~ prohibited from taking any of the actions otherwise prohibited by this Section 3.1.3 in connection with such Business Combination for ~~purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer~~ so long as the Company Board maintains and does not withdraw such ~~tender~~ recommendation; 3.1.4 directly or ~~exchange offer~~ indirectly, solicit proxies or consents or become a participant in a solicitation (as such ~~tender or exchange offer meeting the requirements set forth~~ terms are defined in ~~this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations~~ Regulation 14A under the Exchange ~~Act applicable~~ Act) in opposition to ~~tender or exchange offers, including, if applicable, Section 13(e)-3~~ the recommendation of a majority of the ~~Exchange Act and the related rules and regulations applicable thereto; (ii) is made~~ Company Board with respect to ~~all holders~~ any matter, or knowingly seek to advise or influence any Person, with respect to voting of ~~Issuer~~ any Shares of Then Outstanding Common Stock; ~~(iii) will expire no earlier than midnight, New York City time, on~~ 3.1.5 deposit any Shares of Then Outstanding Common Stock in a voting trust or subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the ~~twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act)~~voting of such Shares of Then Outstanding Common Stock; 3.1.6 propose (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (Ba) any ~~conditions to the consummation of such offer may be waived by the Investor in its sole discretion~~merger, ~~other than~~consolidation, ~~in the event no Third Party Offer is outstanding or is made~~business combination, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, ~~merger~~ purchase of the Company’s assets or ~~other business combination involving Issuer~~ businesses, or ~~any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination~~ similar transaction involving the ~~Issuer or any Subsidiary thereof~~ Company or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~b) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to ~~Issuer or any of its Subsidiaries~~the Company; ~~(ii) except as provided~~ 3.1.7 act in ~~Article 3, make or participate in, directly or indirectly,~~ concert with any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under~~ third party to take any action in the ~~Exchange Act) to vote~~preceding clauses 3.1.1 through 3.1.6, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) , other than any actions taken by ~~a third Person which~~the Investor related to negotiating, ~~for~~ entering into and exercising the ~~avoidance of doubt~~rights under this Agreement, ~~is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (~~the Securities Purchase Agreement or any ~~13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%)~~ document entered into in connection with any of the ~~outstanding shares of Issuer Common Stock~~ foregoing; 3.1.8 enter into discussions, negotiations, arrangements or ~~thirty-five percent (35%~~agreements with any Person relating to the foregoing actions referred to in the preceding clauses 3.1.1 through 3.1.7; or 3.1.9 request or propose to the Company Board, any member(s) thereof or any officer of the ~~voting power~~ Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause 3.1.9); provided, however, that nothing in this Section 3.1 shall limit (i) the rights available (including the enforcement of such rights) to the Investor and its Affiliates under this Agreement, the Acquisition Agreement (as defined in the Securities Purchase Agreement), the Securities Purchase Agreement or any document entered into in connection with any of the ~~Issuer~~foregoing, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval ability of the ~~Issuer Board;~~ Investor and its permitted transferees’ ability to make a pledge of securities (subject to Section 2.1) or (iii) ~~subject to the obligations of~~ the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any ~~material Subsidiary or its debts, or of a substantial part~~ of its ~~assets~~Affiliates or their respective directors, ~~under any federal~~executive officers, ~~state~~ partners, principals, employees or ~~foreign bankruptcy~~managing members or agents (acting in such capacity) from communicating privately with the Company’s directors, ~~insolvency, receivership~~ officers or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and advisors so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions withsuch communications are not intended to, and ~~make private proposals~~ would not reasonably be expected to, ~~the Issuer Board or management~~ require any public disclosure of ~~the Issuer with respect to~~ such ~~proposed transaction or a competing proposal by the Investor~~communications.

Appears in 2 contracts

Samples: Investor Rights Agreement (GTT Communications, Inc.), Securities Purchase Agreement (GTT Communications, Inc.)

Standstill. Unless earlier terminated pursuant to Section 6.2, during the Standstill Term, except as otherwise provided in this Section 3 or unless expressly approved or invited in writing by the Board of Directors, neither the Investor nor any of its controlled Affiliates or any Third Party that acquires, by way of merger, acquisition, consolidation, share purchase, asset purchase, recapitalization, restructuring or similar transactions, all or substantially all of the assets of the Investor or beneficial ownership of a majority of the voting securities of the Investor (or any surviving or resulting entity thereof) (such Third Parties, “Successor Affiliates” and, collectively with the Investor and its controlled Affiliates, the “Standstill Parties”) shall (and the Investor shall cause its controlled Affiliates not to): (a) ~~From and after the date hereof~~directly or indirectly acquire beneficial ownership of Shares of Then Outstanding Common Stock and/or Common Stock Equivalents, or make a tender, exchange or other offer to acquire Shares of Then Outstanding Common Stock or Common Stock Equivalents (other than, in each case, the ~~Investor will not, and will cause each Investor Affiliate not to,~~ Purchased Shares); (b) directly or ~~indirectly, acquire Beneficial Ownership~~ indirectly seek to have called any meeting of ~~shares~~ the stockholders of ~~Issuer Common Stock, including~~ the Company or propose or nominate for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect election to the ~~acquisition by the Investor Affiliates~~ Board of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is~~ Directors any person whose nomination has not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the ~~Non-Investor Directors.~~Board of Directors or fail to cause to be voted in accordance with the recommendation of the Board of Directors with respect to such person for election to the Board of Directors any Shares of Then Outstanding Common Stock; (bc) ~~Notwithstanding~~ directly or indirectly, knowingly encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) the ~~provisions~~ consummation of ~~Section 1.1(a~~which would result in a Change of Control (an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange offer which, if consummated, would result in such Person becoming~~ by the ~~Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (~~Company recommending that stockholders accept any such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor ~~Affiliates will~~ shall not be ~~entitled to commence and accept~~ prohibited from taking any of the actions otherwise prohibited by this Section 3.1(c) for ~~purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer~~ so long as the Company maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or ~~indirectly: (i) enter into~~ indirectly solicit proxies or ~~agree, effect~~ consents or ~~seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate~~ become a participant in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; (f) propose (i) any merger, ~~any Issuer~~ consolidation, business combination, tender or exchange offer, purchase of all or substantially all of the assets or businesses of the Company and its subsidiaries, considered collectively, or the Company’s shares of capital stock that, together with the Shares of Then Outstanding Common Stock of the Company, would represent more than 50% of the Company’s outstanding shares of capital stock, or similar transaction involving the Company, or (ii) any ~~demand for a copy of Issuer’s stock ledger~~recapitalization, ~~list of stockholders~~ restructuring, liquidation or ~~any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (f) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act; (h) by enter into negotiations, arrangements or agreements with any Person relating to the foregoing actions referred to in (a) through (g) above; or (i) request or propose to the Board of Directors, any member(s) thereof or any officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause (i)); Notwithstanding the foregoing, nothing in this Agreement shall restrict the Investor’s executive officers or directors shall be restricted from purchasing or Disposing of shares of Common Stock for his or her personal account (other than through a ~~third Person which~~tender or exchange offer), ~~for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which~~ tendering his or her shares into a Third Party tender ~~offer~~ or exchange offer, ~~if consummated, would result in such third party (~~voting his or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their her shares in ~~response to such offer~~ any way he or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Personsshe determines, or ~~enters~~ depositing his or her shares into ~~substantive discussions with one~~ a voting trust or ~~more Persons regarding, a proposal~~ subjecting them to any arrangement or agreement with respect to ~~a Change of Control Transaction, or~~ the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution voting of such ~~agreement, the Issuer has given Investor written notice of its intention to enter into such agreement~~shares. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investor Agreement (Nektar Therapeutics)

Standstill. (a) ~~From and after~~ Without the ~~date hereof~~prior written consent of the Board of Directors of the Corporation, the ~~Investor will not~~Shareholder agrees that until the Termination Date (as defined below), ~~and will cause each Investor Affiliate~~ he shall not tosell or contract to sell, ~~directly~~ exchange, assign, bequeath, pledge, mortgage, alienate, grant an option to purchase, hypothecate or ~~indirectly~~otherwise in any manner whatsoever (voluntarily or involuntarily, ~~acquire Beneficial Ownership~~ by operation of law or otherwise) Transfer or encumber record or beneficial ownership of any shares of ~~Issuer~~ the Common ~~Stock, including for purposes of this Section 1.1(a), rights, options~~ Stock or ~~other derivative~~ any securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable issued with respect to ~~the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless~~any such shares or into which they may be converted, ~~for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends~~ exchanged or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directorsotherwise changed. (b) ~~Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ The Corporation shall have no obligation to consent to a Transfer of the ~~Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer~~ Common Stock ~~(or other equity securities) having Majority Voting Power (such offer~~unless it shall have received an opinion, ~~a “Third Party Offer”)~~in writing, ~~unless during such ten (10) day period~~of counsel of its choosing, that the ~~Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict~~ proposed Transfer of the ~~purchase of Issuer~~ Common Stock does not give rise to an "ownership change" under ss.382 or otherwise adversely affect the availability to the Corporation of its net operating loss carry forwards and any other applicable tax attributes for Federal Income Tax purposes. (~~or other equity securities~~c) ~~pursuant~~ The Shareholder acknowledges and agrees that the Corporation will give to ~~such Third Party Offer, including implementation~~ its stock transfer agent instructions prohibiting the Transfer of the Common Stock in violation of this Agreement. Shareholder acknowledges any Transfer in violation of this Agreement will be void. (d) In the event that the Corporation is notified of a ~~shareholder rights plan and~~ proposed Transfer by the Shareholder or a transfer proposed by any other ~~customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant~~ person who is subject to ~~clause (x) (including granting~~ an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith agreement with the ~~Issuer Board for a period of at least thirty (30) days as~~ Corporation containing standstill provisions substantially similar to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements those set forth in this Section ~~1.1(b),~~ 5 (a ~~“Permitted Offer”): (i~~"Standstill Agreement") ~~is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers,~~ including, ~~if applicable~~without limitation, ~~Section 13(e)-3~~ those agreements existing as of ~~the Exchange Act~~ this date with Daewoo Corporation, Mitsubishi Corp., General Electric Capital Corporation and The Prudential Insurance Company of America, and the ~~related rules~~ Corporation determines preliminarily to consent to such Transfer or transfer, the Corporation shall notify all persons (including the Shareholder) who are subject to a Standstill Agreement of such proposed consent. The Shareholder and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) each other person who is subject to ~~customary conditions~~ a Standstill Agreement shall have 30 days from the date of such notice to advise the ~~obligation~~ Corporation in writing whether it wishes to Transfer or transfer securities of the ~~Investor Affiliates~~ Corporation, and the amount of securities it wishes to ~~purchase Issuer Common Stock; provided~~Transfer or transfer. The Corporation shall then allocate, ~~that~~in the sole discretion of the Board of Directors of the Corporation, ~~(A)~~ the number of securities of the Corporation which may be the subject of a Transfer or transfer among those persons who have indicated in writing their desire to transfer securities of the Corporation in the event ~~a Permitted Offer is made pursuant~~ the Corporation consents to ~~clause (z) of Section 1.1(b) and no Third Party Offer is commenced~~ the original Transfer or ~~made during~~ transfer. In such event the ~~period~~ Corporation may establish such ~~Permitted Offer is outstanding, it will be a condition~~ mechanism to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock monitor any such ~~shares issued pursuant to Section 1.5(e) (~~Transfer or transfer, including time limitations on such ~~condition~~Transfer or transfer, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)it deems appropriate. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions ~~set forth in~~ of this Section ~~1.1(d) (other than~~ 5 shall terminate on the ~~provisions~~ earliest to occur of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) ~~or (ii) of this Section 1.1(f) has occurred and resulted in~~ notification from the ~~restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply~~ Corporation to the ~~Investor~~Shareholder of such termination, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the ~~Issuer solicits from one or more Persons~~fourth annual anniversary of the date of the Agreement, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) ~~subject to~~ the ~~obligations~~ Transfer with the prior written consent of the ~~Investor under Section 3.2, in~~ Board of Directors of the ~~event that~~ Corporation of all of the ~~Persons designated by~~ Common Stock. The date of termination of the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding Agreement shall be ~~commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of~~ the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors"Termination Date". (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investor Agreement (Janus Industries Inc)

Standstill. 10.1 Until such time as the Teads Stockholders together with their Affiliates hold in the aggregate less than 15% of the total voting power of the outstanding capital stock of the Company determined on an as-converted basis (the “Standstill Period”), without the prior written approval of the Board to be given in its discretion, the Teads Stockholders shall not, and shall cause their Affiliates that are Entities (and anyone acting on behalf of any such Persons) as well as a controlling individual shareholder of a Teads Stockholder, but excluding such Affiliates’ directors and officers, other than in their capacity as such on behalf of Seller or its Affiliates that are Entities or as a controlling individual shareholder, not to: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to~~acquire or agree to acquire or make any proposal to acquire, directly or indirectly, ~~acquire~~ Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer any Common Stock (iincluding in derivative form) ~~pursuant~~ other than the Acquisition Stock and other than in connection with a stock split, stock dividend, Preferred Stock conversion, or similar transaction (including as contemplated by the Certificate of Designation of Series A Convertible Preferred Shares of Outbrain Inc. (the “Certificate of Designation”)); provided that, subject to compliance with applicable securities laws, nothing in this Agreement (including but not limited to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth restrictions in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii2) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced prohibit or ~~made during the period~~ restrict such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its Teads Stockholders and their ~~respective Representatives acting on behalf of Investor~~ Affiliates from negotiating, evaluating or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate intrading, directly or indirectly, in any ~~“solicitation”~~ index, exchange traded fund, benchmark or other basket of ~~“proxies” (as such terms are defined under Regulation 14A under~~ securities which may contain or otherwise reflect the ~~Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting~~ performance of, any ~~Issuer Common Stock~~ securities or indebtedness of the Company or any ~~demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ its subsidiaries; (~~other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A~~b) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict “group” (~~x) the Investor Directors from participating~~ as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights defined under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d13(d) of the Exchange Act), with respect to any equity securities of the Company (other than a “group” solely including the Teads Stockholders and their Affiliates with respect to any securities of the Company now or hereafter owned by them); (c) call or seek to have called any annual or special meeting of the Company’s stockholders (each a “Stockholders’ Meeting”) or present or seek to present at any Stockholders’ Meeting any proposal for consideration for action by stockholders or for discussion only by the stockholders; (d) “solicit” or become a ~~third~~ “participant” in any “solicitation” of any “proxy” (as such terms are defined in Regulation 14A under the Exchange Act) from or by any other stockholder of the Company in connection with any vote on any matter, or agree or announce its intention to vote with any Person ~~which~~(other than the Company) or group undertaking a “solicitation”; (e) seek, make or take any action, publicly or otherwise, to solicit or knowingly encourage any offer or proposal for ~~the avoidance of doubt~~any merger, ~~is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which~~ consolidation, tender ~~offer~~ or exchange offer, ~~if consummated, would result in such third party (~~sale or ~~any 13D Group~~ purchase of ~~which such third party is a member) becoming the Beneficial Owner of~~ assets or securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other ~~relief in respect of the Issuer or any material Subsidiary or its debts~~business combination, ~~or of a substantial part of its assets~~restructuring, ~~under any federal, state or foreign bankruptcy, insolvency, receivership~~ recapitalization or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.transaction

Appears in 1 contract

Samples: Share Purchase Agreement (Outbrain Inc.)

Standstill. (a) ~~From and after the date hereof, the~~ The Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be ~~applicable with respect~~ obliged to dispose of any Voting Stock to the ~~acquisition~~ extent that the aggregate percentage of the Total Voting Power of the Company represented by Voting Stock beneficially owned by the Investor ~~Affiliates of Beneficial Ownership of Issuer Common Stock~~ or which the Investor has a right to acquire is increased beyond the Standstill Percentage (i) ~~pursuant to the Purchase Agreement (unless, for the avoidance~~ as a result of ~~doubt, the representation~~ a recapitalization of the ~~Investor in Section 4.2(d) hereof is not true and correct),~~ Company or a repurchase or exchange of securities by the Company or any other action taken by the Company or its affiliates; (ii) as a result of ~~any stock splits~~an equity index transaction, provided that Investor shall not vote such shares; (iii) by way of stock dividends or other distributions or ~~recapitalizations~~ rights or ~~similar~~ offerings made ~~generally~~ available ~~by the Issuer or any Subsidiary thereof~~ to holders of ~~Issuer Common~~ shares of Voting Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, generally; (iv) ~~in accordance~~ with the consent of a ~~Permitted Offer~~ simple majority of the independent authorized members of the Company's Board of Directors; or (v) ~~which has been approved~~ as part of a transaction on behalf of Investor's Defined Benefit Pension Plan, Profit Sharing Retirement Plan, 401(k) Savings Plan, Sheltered Employee Retirement Plan and Sheltered Employee Retirement Plan Plus, or any successor or additional retirement plans thereto (collectively, the "Retirement Plans") where the Company's shares in such Retirement Plans are ----------------- voted by a ~~majority~~ trustee for the benefit of Investor employees or, for those Retirement Plans where Investor controls voting, where Investor agrees not to vote any shares of such Retirement Plan Voting Stock that would cause Investor to exceed the ~~Non-Investor Directors~~Standstill Percentage. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth As used in this ~~Section 1.1(b)~~Article 8, ~~a “Permitted Offer”):~~ (i) ~~is commenced~~ the term "Voting Stock" means the ------------ Common Stock and ~~made~~ any other securities issued by the Company having the ordinary power to vote in ~~accordance with~~ the ~~applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3~~ election of directors of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer Company (other than ~~with respect to matters related to~~ securities having such power only upon the ~~Investor’s exercise or enforcement~~ happening of ~~rights under the Purchase Agreement~~a contingency that has not occurred), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect~~ term "Voting Power" of any Voting Stock means the number of ------------ votes such Voting Stock is entitled to ~~a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ cast for directors of the ~~Issuer Board;~~ Company at any meeting of stockholders of the Company, (iii) ~~subject~~ the term "Total Voting Power" ------------------ means the total number of votes which may be cast in the election of directors of the Company at any meeting of stockholders of the Company if all Voting Stock was represented and voted to the ~~obligations~~ fullest extent possible at such meeting, other than votes that may be cast only upon the happening of ~~the Investor under Section 3.2, in the event~~ a contingency that ~~the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x)~~ has not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; occurred and (iv) the ~~Investor Percentage Interest is less than ten percent (10%); (v)~~ term "Majority Owned -------------- Subsidiary" means a corporation a majority of whose voting securities are owned ---------- by Investor. For purposes of this Section 8, the Investor ~~Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding~~ shall not be ~~commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization~~ deemed to have beneficial ownership of any Voting Stock held by a pension plan or other ~~relief in respect~~ employee benefit program of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as Investor if the Investor ~~Percentage Interest is equal~~ does not have the power to ~~or greater than fifteen percent (15%),~~ control the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution investment decisions of such ~~agreement, the Issuer has given Investor written notice of its intention to enter into such agreement~~plan or program. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Common Stock Purchase Agreement (CMG Information Services Inc)

Standstill. (a) From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation Neither any member of the ~~Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ Purchaser Group nor any Purchaser Successor shall enter into any transaction or series of transactions as a result of ~~any stock splits~~which the members of the Purchaser Group, ~~stock dividends~~ together with all Purchaser Successors, collectively would have beneficial ownership (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, as amended (the "Exchange Act")) in the aggregate of 50% or ~~other distributions or recapitalizations or similar offerings made generally available by~~ more of the ~~Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity~~ outstanding voting securities of the ~~Issuer)~~Corporation, ~~including rights offerings and distributions made generally to holders of Issuer Common Stock~~ unless: (~~or other equity securities~~ i) in connection therewith, such member of the ~~Issuer) as a result of their ownership of Issuer Common Stock (~~Purchaser Group or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party Purchaser Successor commences ~~(within the meaning of Section 14(d) of the Exchange Act)~~ a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other voting securities of the ~~Investor or~~ Corporation (at a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) price at least equal to ~~or greater than~~ the ~~closing~~ market price ~~of the Issuer Common Stock on Nasdaq on the Trading Day~~ thereof immediately prior to the earlier of ~~(x)~~ the public announcement or commencement thereof) or acquires, or enters into an agreement to acquire, all of such ~~Permitted Offer and~~ voting securities pursuant to a merger or other business combination transaction with the Corporation (~~y) commencement of such Permitted Offer. (c) In~~ it being understood that the ~~event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included~~ prohibitions set forth in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf first sentence of ~~Investor or any Investor Affiliate~~ this Section 6 of this Article V shall not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: apply (A) ~~except~~ to ~~the extent otherwise specifically permitted by this Agreement~~any such offer, ~~any acquisition of any Issuer Common Stock (~~merger or ~~Beneficial Ownership thereof)~~ transaction or ~~any material portion of the assets of Issuer and its Subsidiaries (taken together);~~ (B) from and after the consummation of such offer, merger or transaction if, but only if, as a result of the consummation thereof the members of the Purchaser Group, together with any Purchaser Successor, have beneficial ownership in the aggregate of 50% or more of the outstanding voting securities of the Corporation); (ii) such transaction or series of transactions is approved by an affirmative vote of a majority of the independent directors of the Board of Directors of the Corporation; or (iii) a party that is not an Affiliate of any member of the Purchaser Group or of any Purchaser Successor acquires (and continues to hold), or has announced its intention (and is currently seeking) to acquire, through any transaction or series of transactions, including through any tender or exchange offer, ~~merger~~ beneficial ownership in the aggregate of 25% or ~~other business combination involving Issuer~~ more of the outstanding voting securities of the Corporation or ~~any of~~ has announced its ~~Subsidiaries~~ intention (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Actand is currently seeking) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding effect a merger or other business combination ~~involving~~ transaction with the ~~Issuer~~ Corporation as a result of which such party would become the beneficial owner of 25% or more of the outstanding voting securities of the surviving corporation of the merger or business combination, which merger or other business combination has been approved by the Board of Directors of the Corporation; provided, however, in the event that any member of the Purchaser Group or any ~~Subsidiary thereof or (y) other similar corporate transaction on which a vote of~~ Purchaser Successor makes any such acquisition pursuant to the ~~Issuer’s stockholders is required under Delaware Law or Nasdaq rules;~~ exception provided in this clause (iii) ~~call~~ then, unless such acquisition was also in accordance with clause (i) or ~~seek~~ (ii) above or unless either of the following paragraphs is also applicable, a majority of the Board of Directors of the Corporation shall continue to ~~call a meeting~~ consist of ~~Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or~~ independent directors. The requirements set forth in ~~any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect~~ Section 5 and Section 6 of this Article V shall cease to apply from and after the ~~Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others,~~ first to ~~influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict~~ occur of (x) ~~the Investor Directors from participating~~ such time as ~~members~~ a majority of the ~~Issuer Board and any committees thereof in their capacity as such and~~ independent directors so determines, (y) the ~~Investor from joining~~ acquisition of beneficial ownership of 50% or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any more of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any outstanding voting securities of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f),~~ Corporation under the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter circumstances described in clauses (i) or (ii) above or (z) the members of the Purchaser Group and the Purchaser Successors acquire aggregate beneficial ownership of 80% or more of the outstanding voting securities of the Corporation. In determining whether Section 5 and Section 6 of this ~~Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing~~ Article V shall have ceased to apply at any time in accordance with this paragraph, the percentage beneficial ownership of the outstanding voting securities of the Purchaser Group and Purchaser Successors at any time shall be determined as follows: First, the number of shares of voting securities beneficially owned at such time by the Purchaser Group, together with the number of shares of voting securities beneficially owned by all Purchaser Successors, shall be the numerator. Second, the number of issued and outstanding voting securities of the Corporation at such time shall be determined and there shall be added to such number an amount of voting securities equal to the ~~Investor~~number of shares of Common Stock purchased by the Corporation from and after May 6, ~~then~~2008. This number shall be the denominator. Third, in the ~~event~~ numerator, determined as provided above, shall be divided by the ~~transaction related to such matter has not occurred within six (6) months~~ denominator, determined as provided above, and the resulting percentage shall be considered the percentage beneficial ownership of the ~~date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued~~ Purchaser Group and all Purchaser Successors at such time. The foregoing determination, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any ~~13D Group of which such third party is a member) becoming~~ other calculation as to the ~~Beneficial Owner of securities representing greater than either thirty-five percent (35%)~~ beneficial ownership of the outstanding ~~shares~~ voting securities of ~~Issuer Common Stock~~ any Person, shall be made by the “independent directors”, based on such information, opinions, reports or ~~thirty-five percent (35%)~~ statements presented by such Persons as the “independent directors” reasonably believe are within such Persons’ professional or expert competence and selected with reasonable care by or on behalf of the ~~voting power~~ Corporation. Any such determination by the “independent directors” shall be conclusive and binding, absent manifest error. As used in these Articles, the following terms shall have the meanings set forth below: An “Affiliate” of ~~the Issuer~~any Person shall mean another Person that directly or indirectly, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from through one or more ~~Persons~~intermediaries, Controls, is Controlled by, or ~~enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of~~ is under common Control ~~Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event~~with, such ~~announcement is made with~~ first Person. Liberty Media Corporation and the ~~approval~~ Corporation shall not be deemed Affiliates of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsone another. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Letter Agreement (Directv Group Inc)

Standstill. During the period from the date of this Agreement until the expiration of the Lock-Up Period (the “Standstill Term”), neither the Investor nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership (as determined in accordance with Rule 13d-3 and Rule 13d-5 under the Exchange Act) of shares of ~~Issuer~~ Common ~~Stock, including for purposes of this Section 1.1(a), rights, options~~ Stock or ~~other derivative~~ any securities convertible or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer exchangeable into Common Stock (i) excluding any shares of Common Stock acquired pursuant to the ~~Purchase Agreement~~ Transaction Agreements), or make a tender, exchange or other offer to acquire shares of Common Stock or any securities convertible or exchangeable into Common Stock; (~~unless~~b) directly or indirectly, ~~for the avoidance of doubt, the representation~~ seek to have called any meeting of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities stockholders of the ~~Issuer)~~Company, ~~including rights offerings and distributions made generally~~ propose or nominate for election to ~~holders~~ the Company’s Board of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender~~ Directors or ~~exchange offer which, if consummated, would result~~ cause to be voted in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect favor of such ~~Third Party Offer under any shareholder rights plan~~ person proposed or ~~granting approval of such offeror~~ nominated by the Investor for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as election to the ~~terms~~ Company’s Board of ~~such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase~~ Directors any shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (~~iii~~c) ~~will expire no earlier than midnight~~directly or indirectly, ~~New York City time~~knowingly encourage or support a tender, ~~on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject~~ exchange or other offer or proposal by any Third Party with respect to ~~customary conditions to the obligation~~ shares of ~~the Investor Affiliates to purchase Issuer~~ Common Stock or any securities convertible or exchangeable into Common Stock; provided, ~~that~~however, that from and after the filing of a Schedule 14D-9 (Aor successor form of Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 under the Exchange Act) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Company recommending that stockholders accept any such offer or proposal, Investor ~~Affiliates, constitute no less than a majority~~ shall not be prohibited from taking any of the ~~outstanding shares of Issuer Common Stock outstanding at~~ actions otherwise prohibited by this Section 8.2(c) only for so long as the ~~time of commencement that are~~ Company maintains and does not ~~Beneficially Owned by the Investor Affiliates as of the date~~ withdraw such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer.recommendation; (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any shares of Common Stock; provided, however, that the Standstill Parties may solicit proxies or ~~entity~~ consents and may become a participant in a solicitation in connection with any proposal that would adversely affect the Investor’s rights under the Transaction Agreements [***] (it being agreed that the foregoing proviso shall not relate to proposals for the nomination and/or election of directors and Company Equity Plans (as defined below)); (e) deposit any shares of Common Stock in a voting trust or subject any shares of Common Stock to any arrangement or agreement with respect to the voting ofof such shares of Common Stock; (f) propose (i) any merger, ~~any Issuer Common Stock~~ consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or any ~~demand for a copy~~ Change of ~~Issuer’s stock ledger~~Control transaction involving the Company or (ii) any recapitalization, ~~list of stockholders~~ restructuring, liquidation or ~~any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (f) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group~~ “partnership, limited partnership, syndicate, or ~~otherwise act in concert~~ other group” within the meaning of Section 13(d)(3) of the Exchange Act; (h) enter into discussions, negotiations, arrangements or agreements with any ~~Person, in each case, with respect~~ Person relating to the ~~Issuer~~ foregoing actions referred to in (a) through (f) above; provided, however, that nothing contained in this Section 8.2 shall prohibit the Investor or its Affiliates from acquiring a company or business that owns shares of Common ~~Stock~~Stock or any securities convertible or exchangeable into Common Stock provided that any such securities of the Company so acquired will be subject to the provisions of this Section 8.2; or (i) request or propose to the Company’s Board of Directors (or any committee thereof), any member(s) thereof or any officer of the Company that the Company amend, waive, or ~~seek~~consider the amendment or waiver of, ~~propose or otherwise act alone or~~ any provisions set forth in ~~concert with others~~this Section 8.2 (including this clause (i)); provided, ~~to influence or control Issuer’s management~~however, ~~the Issuer Board or policies, except~~ that (A) nothing contained in this ~~subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y)~~ Section 8.2 shall prohibit the Investor from ~~joining~~ making proposals to the Company’s Chairman or ~~in any way participating in~~ Chief Executive Officer on a ~~13D Group or otherwise acting in concert with any Person~~confidential, ~~in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make~~ nonpublic basis for a ~~public announcement regarding any~~ proposed transaction between the Parties of the ~~types~~ type described in the foregoing clauses (a) and (f) or a proposal for a waiver or amendment of ~~matters set forth~~ the type described in clause (i) above; , in either such case so long as the Investor reasonably believes in good faith that neither it nor the Company would reasonably be expected to be required by applicable Law or stock exchange requirement to disclose publicly any such proposal and (vB) ~~bring~~ nothing in the foregoing clause (b) shall prohibit the Investor from proposing to the Company’s Nominating and Corporate Governance Committee (and not pursuant to the advance notice provisions set forth in the Company’s bylaws), on a confidential, non-public basis, potential director candidates for consideration by the Company’s Nominating and Corporate Governance Committee, which candidates the Investor believes would be in the best interest of the Company and its stockholders, so long as the Investor reasonably believes in good faith, after consultation with its outside counsel, that neither it nor the Company would reasonably be expected to be required by applicable Law or stock exchange requirement to disclose publicly any ~~action,~~ such proposal. Neither (x) transfers or ~~otherwise act,~~ resales of the Shares by the Investor to ~~contest~~ any other person in compliance with Section 8.5 or (y) the ~~validity~~ mere voting of the Shares subject to Section 8.3 will be deemed to be a breach of the Investor’s standstill obligations under this Section ~~1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~8.2. (ej) ~~Unless earlier terminated~~ Section 8.2 shall terminate and have no further force or ~~made inapplicable pursuant to Section 1.1(f)~~effect, ~~the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate~~ upon the ~~expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant~~ earliest to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)):occur of: (i) ~~in the event~~ provided that ~~a tender offer or exchange offer for at least thirty-five percent (35%)~~ none of the ~~Issuer Common Stock is commenced (within~~ Standstill Parties has violated Section 8.2, the ~~meaning of Section 14(d) of~~ public announcement by the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (Company or any ~~13D Group~~ Third Party of ~~which~~ any definitive agreement between the Company and such ~~third party is~~ Third Party and/or any of its Affiliates providing for a ~~member) becoming the Beneficial Owner~~ Change of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offerControl; (ii) ~~the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding,~~ a ~~proposal with respect to~~ Third Party commences a ~~Change of Control Transaction, or the Issuer makes a public announcement that it is~~ tender offer seeking to ~~sell itself and,~~ acquire beneficial ownership of more than 50% of the Company’s outstanding Common Stock and the Board of Directors of the Company has publicly supported the proposal or recommended that the stockholders tender their Common Stock in such ~~event, such announcement is made with the approval of the Issuer Board~~tender offer; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) a bona fide tender offer by a Third Party which is not ~~appointed~~ opposed by the Company’s Board of Directors (but only after the Company’s filing of a Schedule 14D-9, or any amendment thereto, with the SEC disclosing the recommendation of the Company’s Board of Directors with respect to ~~the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting~~ such tender offer), or (y) an issuer tender offer by the Company; provided that Section 8.2 shall be reinstated and apply in full force according to its terms if ~~so nominated are~~ any event set forth in this clause (iii), which resulted in the termination of Section 8.2 is not ~~so elected to the Issuer Board,~~ completed or ~~the Issuer otherwise breaches its obligations under Article 3;~~if such announced transaction is abandoned and no similar transaction has been announced and not abandoned; or (iv) the ~~Investor Percentage Interest is less than ten percent (10%); (v)~~ expiration of the ~~Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking~~ Standstill Term; provided, however, that if Section 8.2 terminates due to (x) ~~liquidation, reorganization~~ clause (i) above and such definitive agreement is abandoned and no other definitive agreement providing for a Change in Control has been announced and not abandoned or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect terminated within ninety days thereafter or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) ~~consolidation, (iii) Change~~ above and the tender offer is withdrawn or abandoned or the Board of ~~Control Transaction, or (iv) other business combination transaction unless,~~ Directors of the Company withdraws its recommendation in ~~each case, at least ten (10) days~~ favor of such tender offer prior to the ~~execution~~ completion of ~~such agreement~~the tender offer, the ~~Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of~~ restrictions contained in Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor 8.2 shall again be applicable until otherwise terminated pursuant to this Section ~~1.1(g~~8.2(j), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stock Purchase Agreement (Jounce Therapeutics, Inc.)

Standstill. ~~(a) From and after~~ During the ~~date hereof~~Standstill Period, the ~~Investor will not~~Investor, ~~and will cause each Investor Affiliate~~ or any of its Affiliates, shall not ~~to,~~ directly or indirectly, except as expressly invited in writing by the Company: i. subject to Section 5.16, without the express consent of the Company, acquire ~~Beneficial Ownership~~ any additional equity securities (including Ordinary Shares, American Depositary Shares and Ordinary Share Equivalents) of ~~shares~~ the Company or any instrument that gives the Investor or any of ~~Issuer Common Stock, including for purposes~~ its Affiliates the economic equivalent of ~~this Section 1.1(a), rights, options or other derivative~~ ownership of an amount of securities ~~or contracts or instruments to acquire such ownership that derive their value~~ of the Company (~~in whole or in part~~a “Derivative”) ~~from such Issuer Common Stock,~~ if, after ~~giving effect to~~ such acquisition, the ~~Investor~~Investor would beneficially own more than twenty one percent (21.0%) of the Company’s ~~Investor Percentage Interest would exceed the Cap;~~ outstanding share capital; ii. knowingly encourage or support a tender, exchange or other offer or proposal by a Third Party, provided, however, that from and after the filing of a Schedule 14D-9 (or successor form of Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) by the Company recommending that stockholders accept any such ~~restriction on acquisitions will~~ offer filed after such offer has commenced, the Investor shall not be ~~applicable~~ prohibited from taking any of the actions otherwise prohibited by this clause (ii) for so long as the Company maintains and does not withdraw such recommendation; iii. propose (x) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (y) any recapitalization, restructuring, liquidation or other extraordinary transaction with respect to the ~~acquisition by~~ Company; iv. seek to have called any meeting of the ~~Investor Affiliates~~ shareholders of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant~~ the Company, propose or nominate for election to the ~~Purchase Agreement (unless, for the avoidance~~ Company’s board of ~~doubt, the representation of the Investor in Section 4.2(d) hereof is~~ directors any person whose nomination has not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the InvestorCompany’s board of ~~directors~~directors (excluding the Designated Director, if any) ~~equal~~ or cause to be voted in favor of such person for election to the Company’s board of directors any Ordinary Shares or ~~greater than the closing price~~ American Depositary Shares of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion then outstanding share capital of the ~~assets of Issuer and its Subsidiaries~~ Company or Ordinary Share Equivalents (~~taken together); (B~~including any Derivatives) ~~any tender or exchange offer, merger or~~ other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiariesthan as contemplated by Section 5.3 hereof; ~~(ii) except as provided~~ v. solicit proxies or consents or become a participant in ~~Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies”~~ a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s board of directors with respect to any matter, or seek to advise or influence any ~~Person~~ Third Party, with respect to voting of any Ordinary Shares or ~~entity~~ American Depositary Shares of the then outstanding share capital of the Company or Ordinary Share Equivalents (including any Derivatives); vi. deposit any Ordinary Shares or American Depositary Shares of the then outstanding share capital of the Company or Ordinary Share Equivalents in a voting trust or subject any Ordinary Shares or American Depositary Shares of the then outstanding share capital of the Company or Ordinary Share Equivalents to any arrangement or agreement with respect to the voting ~~of, any Issuer Common Stock~~ of such Ordinary Shares or ~~any demand for a copy~~ American Depositary Shares of ~~Issuer’s stock ledger, list~~ the then outstanding share capital of ~~stockholders~~ the Company or ~~any other books and records of Issuer (~~Ordinary Share Equivalents other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules;contemplated by Section 5.3 hereof; or (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise vii. act in concert with any ~~Person, in each case, with respect~~ Third Party to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) through (vi) above, or ~~(ii) of this Section 1.1(f) has occurred and resulted~~ form or join in ~~the restrictions imposed under Section 1.1(d) (~~a “partnership, limited partnership, syndicate, or other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance group” with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (any Third Party within the meaning of Section ~~14(d~~13(d)(3) of the Exchange ~~Act~~Act with respect to the equity securities (including any Derivatives) of the Company. Notwithstanding the foregoing, (A) the mere voting in accordance with Section 5.3 hereof of any voting securities of the Company held by the Investor or its Affiliates shall not constitute a violation of any of clauses (i) through (vii) above, (B) nothing in this Agreement shall prohibit the Investor or any of its Affiliates from submitting to the board of directors of the Company or to management of the Company a confidential proposal for a transaction involving a Change of Control or other proposed action, provided that neither the Company nor the Investor or any of its Affiliates is required to publicly disclose the fact that such proposal or request to consider such a proposal was made, (C) if any executive officer or director of the Investor serves as a member of the Company’s board of directors, any action he or she takes in the performance of his or her duties as a member of the Company’s board of directors shall not be deemed to violate this Section 5.1, and (D) the provisions of this Section 5.1 shall terminate and be of no further force or effect if (i) the Company publicly announces the entry into a definitive agreement for the acquisition of the Company or more than fifty percent (50%) of its consolidated assets by a third ~~Person which~~party, ~~for the avoidance of doubt, is not an Investor Affiliate~~ or (~~and not involving~~ ii) any ~~breach of Section 1.1(d)) which~~ person commences a tender ~~offer~~ or exchange ~~offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming~~ offer with respect to the ~~Beneficial Owner of~~ securities representing ~~greater than either thirty-five~~ fifty percent (3550%) ~~of the outstanding shares of Issuer Common Stock~~ or ~~thirty-five percent (35%)~~ more of the voting power of the ~~Issuer~~Company, ~~and either (1)~~ unless the ~~Issuer Board recommends that the stockholders~~ Company files a recommendation statement under Rule 14d-9 of the ~~Issuer tender their shares in response to~~ Exchange Act (or such successor provision) with the SEC within 10 business days following commencement of such offer ~~or does not recommend against~~ advising the ~~tender~~ Company’s stockholders to reject such offer ~~or exchange offer within ten~~ (10provided that if any transaction referred to in the foregoing clauses (i) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; and (ii) is terminated or abandoned, then the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change~~ provisions of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under this Section ~~3.2, in~~ 5.1 shall again become effective). In the event that the ~~Persons designated by the Investor to be elected~~ Company engages in discussions or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of negotiations involving a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) possible Change of Control ~~Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to~~ of the ~~execution of such agreement~~Company, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be ~~entitled~~ given notice thereof and the right to ~~engage~~ participate in ~~private discussions with, and make private proposals to,~~ any process on substantially the ~~Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~same terms as other participants.

Appears in 1 contract

Samples: Share Purchase Agreement (BeiGene, Ltd.)

Standstill. During the Standstill Period (as hereinafter defined): (a) ~~From and after the date hereof, the Investor~~ Executive will not, and will cause ~~each Investor Affiliate~~ his Affiliates (as hereinafter defined) not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchangehereinafter defined) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of ~~Issuer Common Stock pursuant to a tender~~ common stock or ~~exchange offer so long as such tender~~ common stock equivalents or ~~exchange offer (such tender or exchange offer meeting~~ the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is madeCompany, in each case, ~~during~~ now or hereafter outstanding (collectively, “Securities”) without the ~~pendency~~ consent of the Company, if the effect of such ~~Permitted Offer,~~ acquisition would be to increase the ~~Minimum Condition; and (v) provides for consideration payable in cash,~~ aggregate Beneficial Ownership of Securities of Executive to greater than 4.99% of the total number of shares of Company common stock ~~or other securities of~~ then outstanding (the ~~Investor or a Subsidiary thereof, or a combination thereof~~“Percentage Limitation”); provided, ~~that, such consideration offered has, on a per share~~ that the foregoing limitation shall not apply to Executive’s acquisition of ~~Issuer Common Stock basis, a fair market value (as determined in good faith by~~ common stock pursuant to the ~~Investor’s board of directors) equal to or greater than the closing price~~ exercise of the ~~Issuer Common Stock on Nasdaq on~~ stock options granted to him or the ~~Trading Day immediately prior to the earlier~~ vesting of ~~(x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c)~~ any stock options, SARs, or equity he currently holds. In ~~the event the Investor Affiliates make a Permitted Offer~~addition, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor Executive will not, and will cause ~~each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate~~ his Affiliates not to, in make any ~~manner~~public announcement with respect to, ~~directly~~ or ~~indirectly:~~ submit any proposal for or with respect to (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the ~~extent otherwise specifically permitted by this Agreement, any~~ acquisition of ~~any Issuer Common Stock (or~~ Beneficial Ownership ~~thereof~~of any Securities if the effect of such acquisition would be to cause the Beneficial Ownership of Executive and his Affiliates to exceed the Percentage Limitation. For purposes of this Section, the term “Affiliates” shall have the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “Beneficial Ownership” shall be determined in accordance with Rule 13d-3 under the Exchange Act. (b) ~~or any material portion~~ Without the express prior written approval of the ~~assets of Issuer~~ Board, Executive will not, and ~~its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does~~ will cause his Affiliates not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate into, directly or indirectly, ~~any~~ solicit proxies or initiate, propose or become a “participant” in a “solicitation~~” of “proxies~~” (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) ), in opposition to ~~vote,~~ any matter that has been recommended by a majority of the members of the Board or in favor of any matter that has not been approved by the Board or seek to ~~advise~~ advise, encourage or influence any ~~Person or entity~~ “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, “Person”) with respect to the voting ofof Securities in such manner, or initiate, or induce or attempt to induce any Person to initiate, any ~~Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related~~ shareholder proposal relating to the ~~Investor’s exercise~~ Company. (c) Without the express prior written approval of the Board, Executive will not, and will cause his Affiliates not to, join a consortium, partnership, limited partnership, syndicate or ~~enforcement~~ other “group” (within the meaning of ~~rights under~~ Section 13(d)(3) of the ~~Purchase Agreement~~Exchange Act), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, ~~in each case~~for the purpose of acquiring, ~~with respect to the Issuer Common Stock~~holding, voting or disposing of Securities, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and for any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action other purpose which would ~~or would reasonably be expected to force Issuer to make a public announcement regarding any~~ require disclosure under Item 4 of Schedule 13D adopted by the ~~types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest~~ Securities and Exchange Commission under the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~Exchange Act. (ed) ~~Unless earlier terminated or made inapplicable pursuant to Section 1.1(f),~~ The “Standstill Period” shall commence on the ~~provisions of Section 1.1(d) (other than~~ Separation Date and shall terminate on the ~~provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling~~ second annual anniversary of such ~~restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence~~date. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Separation and Release Agreement (American River Bankshares)

Standstill. (a) ~~From and after~~ Each BLR Group Member agrees that, without the prior written consent of the Company, from the date ~~hereof~~of this Agreement until thirty (30) days prior to the deadline for the submission of stockholder nominations for directors for the 2017 Annual Meeting pursuant to the Bylaws (the “Standstill Period”), ~~the Investor will not~~neither it nor any of its Affiliates or Associates will, and it will cause each ~~Investor Affiliate~~ of its Affiliates and Associates not to, directly or indirectly, in any manner, alone or in concert with others: (i) purchase or cause to be purchased or otherwise acquire ~~Beneficial Ownership~~ or agree to acquire beneficial ownership of ~~shares of Issuer~~ any Common Stock or other securities issued by the Company, or any securities convertible into or exchangeable for Common Stock, ~~including for purposes~~ such that the BLR Group together with its Affiliates and Associates (as defined in Section 2.3) would, in the aggregate, beneficially own a number of ~~this Section 1.1(a~~shares in excess of the limitations set forth in the Articles of Amendment and Restatement of the Company, dated as of September 23, 2002 (as the same may be amended or restated from time to time); (ii) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend (other than in a customary commingled brokerage account in the ordinary course of business), ~~rights~~or otherwise transfer or dispose of, ~~options~~ directly or ~~other derivative~~ indirectly, any shares of Common Stock or any securities convertible into or ~~contracts~~ exercisable or ~~instruments to acquire such ownership that derive their value (in whole~~ exchangeable, directly or ~~in part) from such Issuer~~ indirectly, for Common Stock, ifwhether any such transaction is to be settled by delivery of Common Stock or such other securities, ~~after giving effect~~ in cash or otherwise (each, a “Transfer”), in each case without the prior written consent of the Company; provided that the foregoing shall not restrict the BLR Group from (A) a Transfer of any shares of Common Stock to ~~such acquisition,~~ a controlled affiliate that agrees to be bound by the ~~Investor’s Investor Percentage Interest would exceed~~ terms of this Agreement and executes a joinder agreement reasonably acceptable to the ~~Cap; provided, however, that such restriction on acquisitions will not be applicable~~ Company with respect ~~to the acquisition by the Investor Affiliates~~ thereto, or (B) from and after February 6, 2016, a Transfer of ~~Beneficial Ownership~~ any shares of ~~Issuer~~ Common Stock ~~(i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor~~ in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences an ordinary course brokers’ transaction (within the meaning of ~~Section 14(d~~Rule 144(g) of the ~~Exchange Act~~Securities Act of 1933, as amended) ~~a tender or exchange offer which~~that would not, ~~if consummated~~to the knowledge of any BLR Group Member, ~~would~~ result in ~~such Person becoming~~ the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect ultimate transferee of such ~~Third Party Offer under any shareholder rights plan or granting approval~~ shares beneficially owning, together with its affiliates, more than 5% of ~~such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in~~ the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then ~~in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase~~ outstanding shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) ~~will expire no earlier than midnight~~compensate or agree to compensate the Nominee (or the Replacement Director, ~~New York City time, on~~ if applicable) for his services as a director of the ~~twentieth (20th) business day following~~ Company or otherwise in connection with the ~~commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act)~~transactions contemplated by this Agreement; (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, engage in any ~~manner, directly~~ solicitation of proxies or ~~indirectly: (i) enter into~~ consents or ~~agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate~~ become a “participant” in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any a “solicitation~~” of “proxies~~” (as such terms are defined ~~under~~ in Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of proxies or consents (including, without limitation, any solicitation of consents that seeks to ~~vote~~call a special meeting of stockholders), ~~or seek to advise or influence any Person or entity~~ in each case, with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members securities of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~v) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in ~~a 13D Group or otherwise act in concert~~ any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with any ~~Person~~person who is not identified on Schedule A as a BLR Group Member (any such person, ~~in each case~~a “Third Party”), with respect to the ~~Issuer~~ Common Stock; (vi) deposit any Common Stock in any voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting of any Common Stock, other than any such voting trust, arrangement or agreement solely among BLR Group Members and otherwise in accordance with this Agreement; (vii) seek, or encourage any person, to submit nominations in furtherance of a “contested solicitation” for the election or removal of directors with respect to the Company or seek, ~~propose~~ encourage or ~~otherwise act~~ take any other action with respect to the election or removal of any directors; (viii) (A) make any proposal for consideration by stockholders at any annual or special meeting of stockholders of the Company, (B) publicly make any offer or proposal (with or without conditions) with respect to any merger, acquisition, business combination, amalgamation, recapitalization, restructuring, disposition, distribution, spin-off, asset sale or other similar transaction involving the Company, or encourage, initiate or support any Third Party with respect to any of the foregoing, (C) make any public communication in opposition to any transaction approved by the Board, (D) publicly criticize the Company’s business, financial structure or real estate, investment or other strategy, (E) call or seek to call a special meeting of stockholders or (F) make a request for a list of the Company’s stockholders or other Company records, provided, that this proviso (F) shall not apply to the Nominee (or any Replacement Director, if applicable) in his or her capacity as a director of the Company; (ix) seek, alone or in concert with others, ~~to influence or control Issuer’s management,~~ representation on the ~~Issuer Board or policies~~Board, except ~~that this subsection does not restrict~~ as specifically permitted by Section 1.1; (x) seek to advise, encourage, support or influence any person with respect to the ~~Investor Directors from participating as members~~ disposition of any securities of the ~~Issuer Board and~~ Company, or voting of any ~~committees thereof~~ securities of the Company at any annual or special meeting of stockholders, except in ~~their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert~~ accordance with ~~any Person, in each case, to exercise its rights under~~ Section ~~1.1(d)(ii)(B)~~1.2; (ivxi) ~~take~~ make any ~~action which would~~ request or ~~would reasonably be expected~~ submit any proposal to ~~force Issuer to make a public announcement regarding any of~~ amend or waive the ~~types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity~~ terms of this ~~Section 1.1(d)~~Agreement other than through non-public communications with the Company that would not be reasonably determined to trigger public disclosure obligations for any party; or (vixii) ~~enter into~~ disclose any ~~discussions~~ intention, plan or ~~arrangements~~ arrangement inconsistent with any ~~third party with respect to any~~ provision of ~~the foregoing (except as otherwise expressly provided herein)~~this Section 2.1. (eb) ~~Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration~~ Upon written request of the ~~Restricted~~ Company at any time during the Standstill Period~~. For~~ , each BLR Group Member shall promptly notify the ~~avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension~~ Company of the ~~period referred~~ number of shares of Common Stock beneficially owned by such BLR Group Member. Notwithstanding anything to the contrary, nothing in ~~the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i))~~ this Agreement shall ~~not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if~~ prohibit or restrict any director of the ~~following occurs (provided~~Company, ~~that, in~~ including the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party Nominee (or any ~~13D Group of which such third party is~~ Replacement Director, if applicable), from exercising his or her rights and duties as a ~~member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%)~~ director of the ~~outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer~~Company, ~~and either~~ including, but not limited to, (1) ~~the Issuer Board recommends that the stockholders~~ taking any action or making any statement at any meeting of the ~~Issuer tender their shares in response to such offer~~ Board or ~~does not recommend against the tender offer or exchange offer within ten (10) days after the commencement~~ of any committee thereof ~~or such longer period as shall then be permitted under U.S. federal securities laws~~ or (2) making any statement to the ~~Issuer Board later publicly recommends that~~ Chief Executive Officer, the ~~stockholders~~ Chief Financial Officer or any other director of the ~~Issuer tender their shares~~ Company in ~~response to such offer; (ii) the Issuer solicits from one~~ his or ~~more Persons, or enters into substantive discussions with one or more Persons regarding,~~ her capacity as a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsdirector. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Newcastle Investment Corp)

Standstill. During the period (asuch period, the “Standstill Term”) ~~From~~ from and after the date ~~hereof~~of this Agreement until the later of (A) the fifth (5th) anniversary of the expiration or earlier termination of the “Term” (as such term is defined in the Aventis Collaboration Agreement) and (B) the fifth (5th) anniversary of the expiration or earlier termination of the “Term” (as such term is defined in the Sanofi License and Collaboration Agreement), neither the Purchaser Parties nor any of their respective Affiliates (collectively, the ~~Investor will not,~~ “Standstill Parties”) shall (and ~~will~~ the Purchaser Parties shall cause ~~each Investor Affiliate~~ their respective Affiliates not to), except as expressly approved or invited in writing by the Company: (a) directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 3.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership~~ shares constituting Shares of ~~Issuer~~ Then Outstanding Common Stock ~~(i) pursuant to~~ is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of ~~any stock splits~~a repurchase of Shares of Then Outstanding Common Stock, stock ~~dividends~~ split, stock dividend or ~~other distributions or recapitalizations or similar offerings made generally available by~~ a recapitalization of the ~~Issuer or~~ Company, the Standstill Parties shall not be required to dispose of any ~~Subsidiary thereof to holders~~ of ~~Issuer~~ their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or ~~other equity securities~~ indirectly, seek to have called any meeting of the ~~Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities~~ stockholders of the ~~Issuer) as a result~~ Company, propose or nominate for election to the Company’s Board of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender~~ Directors or ~~exchange offer which, if consummated, would result~~ cause to be voted in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect favor of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror~~ person for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as election to the ~~terms~~ Company’s Board of ~~such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares~~ Directors any Shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Then Outstanding Common Stock; (~~iii~~c) ~~will expire no earlier than midnight~~directly or indirectly, ~~New York City time~~encourage or support a tender, on exchange or other offer or proposal by any other Person or group (an “Offeror”) the ~~twentieth~~ consummation of which would result in a Change of Control of the Company (~~20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act~~an “Acquisition Proposal”); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ~~of, any Issuer~~ of such Shares of Then Outstanding Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesStock; (~~iii~~f) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (e) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) ~~So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to~~ enter into discussions, negotiations, arrangements or agreements with any ~~agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior~~ Person relating to the ~~execution of such agreement, the Issuer has given Investor written notice of its intention~~ foregoing actions referred to ~~enter into such agreement.~~in (a) through (e) above; or (h) ~~Notwithstanding~~ request or propose in writing to the ~~provisions~~ Company’s Board of ~~Section 1.1(d)~~Directors, ~~and so long as the Investor Percentage Interest is equal to~~ any member(s) thereof or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion any officer of the ~~Issuer’s assets outside~~ Company that the ~~ordinary course~~ Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1; provided, however, that the mere voting in accordance with Section 5 hereof of ~~business or (ii) the Issuer provides~~ any ~~notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management~~ voting securities of the ~~Issuer with respect to such proposed transaction or a competing proposal~~ Company held by the ~~Investor~~Purchaser Parties or their Affiliates shall not constitute a violation of any of clauses (a) through (h) above.

Appears in 1 contract

Samples: Investor Agreement (Regeneron Pharmaceuticals Inc)

Standstill. During the Standstill Term, neither the Investor nor the Holder nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Holder shall cause its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will~~ notwithstanding the provisions of this Section 5.1(a), if the number of shares constituting Shares of Then Outstanding Common Stock is reduced or if the aggregate ownership of the Standstill Parties is increased as a result of a repurchase by the Company of Shares of Then Outstanding Common Stock, stock split, stock dividend or a recapitalization of the Company, the Standstill Parties shall not be ~~applicable with respect~~ required to ~~the acquisition by the Investor Affiliates~~ dispose of ~~Beneficial Ownership~~ any of ~~Issuer~~ their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or indirectly, (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company, (ii) ~~as a result~~ propose or nominate for election to the Company’s Board of Directors any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~Company’s Board of Directors or (iii) unless a person referred to in the foregoing clause (ii) is nominated by a third party in connection with such party’s publicly announced and not withdrawn Acquisition Proposal, fail to cause to be voted in accordance with the recommendation of the Company’s Board of Directors with respect to such person for election to the Company’s Board of Directors any Shares of Then Outstanding Common Stock; (bc) ~~Notwithstanding~~ directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) the ~~provisions~~ consummation of ~~Section 1.1(a~~which would result in a Change of Control of the Company (an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange offer which, if consummated, would result in such Person becoming~~ by the ~~Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (~~Company recommending that stockholders accept any such offer, ~~a “Third Party Offer”), unless during such ten (10~~Holder shall not be prohibited from taking any of the actions otherwise prohibited by this Section 5.1(c) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as the Company maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; (f) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~Issuer Common Stock~~ recapitalization, restructuring, liquidation or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (f) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (iih) ~~the Issuer solicits from one~~ enter into discussions, negotiations, arrangements or ~~more Persons, or enters into substantive discussions~~ agreements with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject any Person relating to the ~~obligations of the Investor under Section 3.2,~~ foregoing actions referred to in ~~the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either~~ (xa) ~~not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or~~ through (yg) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredabove; or (~~vii~~i) request or propose to the ~~Issuer~~ Company’s Board of Directors, any member(s) thereof or any ~~material Subsidiary shall~~ officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 5.1 (including this clause (i)); provided, however, that (A) ~~voluntarily commence~~ nothing contained in this Section 5.1 shall prohibit the Holder from making confidential, non-public proposals to, or entering into confidential, non-public discussions, negotiations, arrangements or agreements with, the Company and with third parties with the express authorization of the Company, which the Holder or any ~~proceeding~~ Affiliate may request in a confidential, non-public manner, regarding a transaction or ~~file any petition seeking liquidation~~matter of the type described in the foregoing clauses (a) and (f), ~~reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect,~~ and (B) ~~consent~~ nothing in the foregoing clause (b) shall prohibit the Holder from proposing to the ~~institution of, or fail to contest in a timely~~ Company’s Governance and ~~appropriate manner, any proceeding or petition described in clause~~ Nominating Committee (~~A) above, (C) apply for or consent~~ and not pursuant to the ~~appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for~~ advance notice provisions set forth in the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%Company’s bylaws), in a confidential, non-public manner, potential director candidates for consideration by the ~~event (i)~~ Company’s Governance and Nominating Committee, which candidates the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion Holder believes would be in the best interest of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, Company and ~~make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~its stockholders.

Appears in 1 contract

Samples: Warrant Agreement (Vericel Corp)

Standstill. Each Holder hereby agrees that, from the Closing Date until the Standstill Termination Date, unless an exemption or waiver is otherwise approved in advance in writing by the Board, such Holder shall not: (a) ~~From and after the date hereof~~purchase or otherwise acquire, ~~the Investor will not~~offer or propose to acquire, ~~and will cause each Investor Affiliate not to~~or solicit an offer to sell or agree to acquire, directly or indirectly, ~~acquire~~ alone or in concert with others, Beneficial Ownership of any Capital Stock or any Derivative Securities (excluding shares and securities received by way of ~~Issuer Common Stock~~stock dividend, ~~including for purposes of this Section 1.1(a), rights, options~~ stock reclassification or other ~~derivative securities~~ distributions or ~~contracts or instruments~~ offerings made available on a pro rata basis to ~~acquire such ownership that derive their value (in whole or in part~~the Company’s stockholders) ~~from such Issuer Common Stock,~~ if, after giving effect ~~to such acquisition~~thereto, the ~~Investor’s Investor Percentage Interest~~ Holders would ~~exceed~~ collectively Beneficially Own, in the ~~Cap~~aggregate, an amount of Capital Stock, including any Derivative Securities on an as-exercised, converted or exchanged basis, as applicable, in excess of the Stockholder Threshold; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unlessthat, ~~for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ if as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) reduction in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of ~~Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer~~ Common Stock outstanding at due to the ~~time~~ repurchase of ~~commencement that are not Beneficially Owned~~ shares of Common Stock by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such conditionCompany, the ~~“Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than~~Holders collectively Beneficially Own, in the ~~event no Third Party Offer is outstanding~~ aggregate, an amount of Capital Stock, including any Derivative Securities on an as-exercised, converted or ~~is made~~exchanged basis, as applicable, in ~~each case, during~~ excess of the ~~pendency of such Permitted Offer~~Stockholder Threshold, the ~~Minimum Condition; and~~Holders shall not be in violation of this Section 3.1(a) so long as the Holders do not take any of the actions referred to in the first clause of this Section 3.1(a); (vb) ~~provides for consideration payable in cash~~make, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, alone or in concert with others (including by or through any group), any “solicitation” of “proxies” (as such terms are defined ~~under~~ or used in Regulation 14A under the Exchange Act) to ~~vote~~vote Common Stock or other Capital Stock of the Company or to provide or withhold consents with respect to Common Stock or other Capital Stock of the Company, whether subject to or exempt from the proxy rules, or seek to advise or influence any Person or entity with respect to the voting of, or the providing or withholding consent with respect to, any ~~Issuer~~ Common Stock or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members Capital Stock of the ~~Issuer Board and~~ Company; provided, however, that the foregoing will not be deemed to restrict or limit in any ~~committees thereof~~ manner in ~~their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x)~~ which any ~~proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ of the ~~Issuer’s stockholders is required under Delaware Law~~ Holders votes any of its respective shares of Common Stock or ~~Nasdaq rules~~Capital Stock, directly or by proxy, subject to compliance with the other terms and conditions of this Agreement; (~~iii~~c) ~~call~~ except as permitted by Section 3.2, either directly or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act~~ indirectly in concert with others (including by or through any ~~Person, in each case,~~ group) make any offer with respect ~~to the Issuer Common Stock~~to, or ~~seek~~make or submit a proposal with respect to, ~~propose~~ or ~~otherwise act alone~~ ask or request any other Person to make an offer or proposal with respect to, any transaction that would, if consummated, be reasonably likely to result in ~~concert with others, to influence or~~ a change of control ~~Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members~~ of the ~~Issuer Board and any committees thereof in their capacity as such and (y)~~ Company, including a merger, business combination, restructuring, reorganization, recapitalization, tender or exchange offer or asset disposition involving the ~~Investor from joining~~ Company or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of its Affiliates; provided, however, that the ~~types of matters set forth in clause~~ Holders shall be permitted to (i) ~~above; (v) bring~~ vote on any ~~action, or otherwise act, to contest~~ such transaction in accordance with the ~~validity~~ terms and conditions of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (Agreement and ~~the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or~~ (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender into any tender offer or exchange offer ~~for at least thirty-five percent (35%) of the Issuer Common Stock is~~ not commenced ~~(within the meaning of Section 14(d) of the Exchange Act)~~ by a ~~third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer,~~ Holder if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1A) the ~~Issuer~~ Board recommends (by majority vote) that the stockholders of the ~~Issuer~~ Company tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ~~ten (10) days~~ 10 Business Days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2B) the ~~Issuer~~ Board later publicly recommends (by majority vote) that the stockholders of the ~~Issuer~~ Company tender their shares in response to such offer; (iid) except as provided in this Agreement, either directly or indirectly in concert with others (including by or through any group) seek representation on the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction,~~ Board or the ~~Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ board of directors (or equivalent governing body) of any of the ~~Issuer Board~~Company’s controlled Affiliates, seek to remove any members of the Board or expand or reduce the size of the Board or otherwise act alone or in concert with others (including by or through any group) to seek control of the Board or the board of directors (or equivalent governing body) of any of the Company’s controlled Affiliates; (~~iii~~e) ~~subject~~ form, join, knowingly encourage the formation of or knowingly engage in discussions relating to the ~~obligations~~ formation of, or participate in, a “group” within the meaning of Section 13(d)(3) of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated Exchange Act for ~~inclusion on management’s slate~~ purposes of ~~nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board~~seeking control, or influencing the ~~Issuer otherwise breaches its obligations under Article 3; (iv)~~ control or management of, the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredCompany; or (~~vii~~f) ~~the Issuer~~ either directly or indirectly in concert with others (including by or through any ~~material Subsidiary shall (A~~group) ~~voluntarily commence~~ publicly announce any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution ofintention, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into or disclose any ~~agreement regarding~~ plan or arrangement inconsistent with the foregoing (including publicly making a ~~(i) merger~~request that the Company or the Board waive, ~~(ii) consolidation, (iii) Change of Control Transaction,~~ amend or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the terminate any provisions of this Section ~~1.1(d~~3.1), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stockholder Agreement (California Resources Corp)

Standstill. (a) ~~From~~ Subject to Sections 4.1(b), 4.1(c) and ~~after~~ 4.4, each of WLR-IV, Parallel Employee Fund and each Permitted Transferee agrees that during the ~~date hereof~~Standstill Period, without the ~~Investor will~~ prior written approval of the Company, such Person shall not, and ~~will~~ shall cause each ~~Investor Affiliate~~ member of the WLR Group not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole act alone or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable concert with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any ~~stock splits, stock dividends~~ other Person or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not group to~~, in any manner~~, directly or indirectly: (i) ~~enter into~~ acquire or ~~agree~~agree to acquire, ~~effect or seek~~whether by purchase, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, through the acquisition of control of another Person (including by way of merger or consolidation), by joining a partnership, syndicate or other ~~business combination involving Issuer~~ group, through the use of a derivative instrument or ~~any of its Subsidiaries (provided~~voting agreement, ~~that~~or otherwise, ~~this clause does not restrict any Investor Affiliate from~~ (x) ~~opposing publicly~~ without the prior consent of a representative of the Company who has been authorized by the Board to approve or ~~privately any tender or exchange offer~~disapprove such transactions on behalf of the Company generally, ~~merger or other business combination involving~~ debt securities of the ~~Issuer or any Subsidiary thereof~~ Company or (y) ~~Transferring any~~ Beneficial Ownership of Voting Stock, except that members of the WLR Group may (A) Beneficially Own the Warrants and the shares of ~~Issuer~~ Underlying Common Stock, (B) acquire Beneficial Ownership of additional shares of Common Stock pursuant to ~~such tender or exchange offer~~Sections 6.2 and 6.3, ~~merger or other business combination); or~~ and (C) ~~any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any~~ acquire Beneficial Ownership of ~~its Subsidiaries~~additional shares of Common Stock representing in the aggregate not more than 3.4% of the Total Current Voting Power; (ii) ~~except as provided in Article 3, make~~ (A) solicit or participate ~~in, directly or indirectly,~~ in any “solicitation” of “proxies” (as such terms are ~~defined under Regulation 14A under~~ used in the ~~Exchange Act~~rules of the SEC) with respect to ~~vote,~~ any Voting Stock or (B) seek to advise or influence any Person ~~or entity~~ with respect to the voting ~~of,~~ of any ~~Issuer Common~~ Voting Stock ~~or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ (other than in accordance with ~~respect to matters related to~~ and consistent with the ~~Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ recommendation of the ~~Issuer Board and any committees thereof~~ Board); provided, that the limitation contained in ~~their capacity as such or~~ this clause (Bii) ~~the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others~~ shall not apply to ~~vote against, (x)~~ any proposal ~~of a third party regarding a merger or other business combination involving~~ recommended by the ~~Issuer or~~ Board to be voted on by the Company’s shareholders that is not first publicly proposed by any ~~Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ member of the ~~Issuer’s stockholders is required under Delaware Law or Nasdaq rules~~WLR Group; (iii) ~~call~~ deposit any Voting Stock or ~~seek to call a meeting of Issuer’s stockholders or initiate~~ any ~~stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate~~ Convertible Securities in a ~~13D Group~~ voting trust or, except as otherwise provided or ~~otherwise act in concert~~ contemplated herein or the Warrant Agreement, subject any Voting Stock to any arrangement or agreement with any ~~Person, in each case,~~ Person with respect to the ~~Issuer Common~~ voting of such Voting Stock, other than any such trust, arrangement or ~~seek~~agreement the only parties to, ~~propose~~ or ~~otherwise act alone or in concert with others~~beneficiaries of, ~~to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as~~ which are members of the ~~Issuer Board and~~ WLR Group, the terms of which do not require or expressly permit any ~~committees thereof in their capacity as such and (y) the Investor from joining or in any way participating~~ party thereto to act in a ~~13D Group or otherwise acting in concert~~ manner inconsistent with ~~any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B)~~this Agreement; (iv) form, join or participate in a group (other than a group comprised solely of other members of the WLR Group) with respect to any Voting Stock or Convertible Securities; provided, however, such Person shall not be deemed to have formed, joined or participated in a group with another Person solely as a result of one or more Persons selling Registrable Securities under Article 5; (v) effect or seek, offer or propose to effect any Change of Control of the Company or any recapitalization, restructuring, liquidation, dissolution or other transaction with respect to the Company or any of its Subsidiaries or Affiliates; provided, however, nothing herein shall prohibit any member of the WLR Group from taking any such action if such offer or proposal (A) is specifically requested to be made in writing by the Board prior to the making off such offer or proposal or (B) where such action is comprised solely of discussions with or proposals to the Board and senior executives of the Company on a confidential basis; (vi) authorize any representative of any member of the WLR Group to be named as a director candidate on a proxy or ballot of any other Person relating to a matter to be voted on at a meeting of the Company’s shareholders, other than the proxy or ballot of the Company with the recommendation of the Board; (vii) otherwise effect or seek, offer or propose to effect control of, or influence over, the management, Board or policies of the Company, its Subsidiaries or controlled Affiliates or to publicly seek a waiver, amendment or modification of any provision of this Section 4.1(a); provided, however, that no action by the Board Designee (solely in his or her capacity as such) shall be deemed to violate this Section 4.1(a)(vii) and nothing herein shall prohibit any member of the WLR Group from taking any such action if such action (A) is specifically requested to be made in writing by the Board prior to the taking of such action or (B) where such action is comprised solely of discussions with or proposals to the Board and senior executives of the Company on a confidential basis; (viii) call or join with any other Person (other than the Board) in calling any special meeting of the shareholders of the Company; or (ix) otherwise (A) take any action ~~which would or~~ that would reasonably be expected to ~~force Issuer~~ compel the Company to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) ~~consent to the institution of~~publicly disclose any intention, plan or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest arrangement that is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions inconsistent with, ~~and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.~~or

Appears in 1 contract

Samples: Investor Rights and Restrictions Agreement (Greenbrier Companies Inc)

Standstill. (a) From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for For purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisitionAgreement, the ~~Investor~~“Standstill Period” shall mean the period from the date of this Agreement until the later of (x) the conclusion of the Company’s ~~Investor Percentage Interest would exceed~~ 2013 annual meeting of stockholders (the ~~Cap~~“2013 Annual Meeting”) and (y) such time as none of the Third Point Nominees are members of the Board; provided, however, that ~~such restriction on acquisitions will~~ if the Board does not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation nominate each of the ~~Investor in Section 4.2(d) hereof is not true and correct),~~ Third Point Nominees at the 2013 Annual Meeting or any subsequent annual meeting of the stockholders of the Company (~~ii)~~ other than as a result of such Third Point Nominee(s)’ refusing or declining to serve as a nominee), the Standstill Period shall expire at such time as any ~~stock splits~~of the Third Point Nominees are not so nominated provided, ~~stock dividends or other distributions or recapitalizations or similar offerings made generally available by~~ further, that if the ~~Issuer or any Subsidiary thereof to holders~~ advance notice deadline for nominations of ~~Issuer Common Stock~~ directors at such upcoming annual meeting of the stockholders of the Company has passed (or ~~other equity securities~~ there remains less than 10 days from the time the Third Point Nominees are notified that any of ~~the Issuer~~them have not been so nominated until such advance notice deadline), ~~including rights offerings~~ the Board shall take all appropriate action to (i) provide the Third Point Group with a 10-day period from the time the Third Point Nominees are notified that any of them have not been so nominated to comply with the advance notice provisions for nominations of directors contained in the Bylaws at such upcoming annual meeting and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) cause such upcoming annual meeting not to be held prior to 90 days following the ~~date any~~ time the Third ~~Party commences (within~~ Point Nominees are notified they have not been so nominated. During the ~~meaning of Section 14(d)~~ Standstill Period, each member of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will Point Group shall not, and ~~will~~ shall cause each ~~Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor~~ Third Point Affiliate not to, in take any ~~manner~~of the following actions, directly or indirectly: a. solicit proxies or written consents of stockholders, or any other person with the right to vote or power to give or withhold consent in respect of Voting Securities, or conduct, encourage, participate or engage in any other type of referendum (ibinding or non-binding) ~~enter into~~ with respect to, or ~~agree~~from the holders of Voting Securities or any other person with the right to vote or power to give or withhold consent in respect of Voting Securities, make, or in any way participate or engage in (other than by voting its Voting Securities in a manner that does not violate this Agreement), any “solicitation” of any proxy, consent or other authority to vote any Voting Securities or make any shareholder proposal (whether pursuant to Rule 14a-8 promulgated under the Exchange Act or otherwise), with respect to any matter, or become a participant in any contested solicitation with respect to the Company, including without limitation relating to the removal or the election of directors; b. form or join in a partnership, limited partnership, syndicate or other group, including without limitation a group as defined under Section 13(d) of the Exchange Act, with respect to the Common Stock or any other Voting Securities, or otherwise support or participate in any effort by a third party with respect to the matters set forth in Section 3)a., or deposit any shares of Common Stock or any other Voting Securities in a voting trust or subject any shares of Common Stock or any other Voting Securities to any voting agreement, other than solely with other members of the Third Point Group or other Third Point Affiliates with respect to the shares of Common Stock now or hereafter owned by them or pursuant to this Agreement; c. without the prior approval of the Board contained in a written resolution of the Board, (x) either directly or indirectly for itself or its Affiliates, or in conjunction with any other person or entity in which it is or proposes to be either a principal, partner or financing source or is acting or proposes to act as broker or agent for compensation, effect or seek, offer or propose (whether publicly or otherwise) to effect, or ~~announce any intention to effect or~~ cause or participate in, or (y) except as set forth in or the next sentence, in any way ~~assist~~knowingly support, assist or facilitate ~~or encourage~~ any other ~~Person~~ person to effect or seek, offer or propose ~~(whether publicly~~ to effect, or ~~otherwise) to effect~~ cause or participate in~~: (A) except to the extent otherwise specifically permitted by this Agreement~~, any ~~acquisition of any Issuer Common Stock~~ (~~or Beneficial Ownership thereof~~i) ~~or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any~~ tender offer or exchange offer, ~~merger or other business combination involving Issuer or any of its Subsidiaries (provided~~merger, ~~that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger~~ acquisition or other business combination involving the ~~Issuer~~ Company or any ~~Subsidiary thereof~~ of its subsidiaries or affiliates; (ii) form of business combination or acquisition or other transaction relating to a material amount of assets or securities of the Company or any of its subsidiaries or affiliates or (yiii) ~~Transferring any shares~~ form of ~~Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization,~~ restructuring, ~~liquidation, dissolution~~ recapitalization or ~~other extraordinary~~ similar transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries; (ii) except as provided~~ subsidiaries or affiliates. Notwithstanding the foregoing, nothing in ~~Article 3, make~~ this Section 3)c. shall prohibit any member of the Third Point Group or ~~participate in, directly~~ any Third Point Affiliate from engaging in private discussions with third parties regarding a potential transaction to be proposed by such third party or ~~indirectly,~~ presenting any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect~~ potential transaction to the ~~voting of, any Issuer Common Stock or any demand for~~ Board on a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Personprivate basis, in each case, ~~with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or~~ in ~~concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except~~ circumstances that ~~this subsection does~~ would not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to ~~force Issuer to make a~~ require public ~~announcement regarding~~ disclosure by the Company or any member of the ~~types~~ Third Point Group or any Third Point Affiliate, in each case at or around the time the proposal is made; d. make, or cause to be made, any statement or announcement that relates to and constitutes an ad hominem attack on, or relates to and otherwise disparages, the Company, its officers or its directors or any person who has served as an officer or director of ~~matters set forth~~ the Company in ~~clause~~ the past, or who serves on or following the date of this Agreement as an officer or director of the Company: (i) ~~above;~~ in any document or report filed with or furnished to the SEC or any other governmental agency, (vii) ~~bring~~ in any ~~action~~press release or other publicly available format, or ~~otherwise act~~(iii) to any analyst, ~~to contest~~ journalist or member of the ~~validity of this Section 1.1(d~~media (including without limitation, in a television, radio, newspaper or magazine interview); or ~~(vi) enter into~~ e. as a result of acquiring beneficial ownership of any ~~discussions or arrangements with any third party with respect to any~~ Voting Securities of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~Company, ~~the provisions~~ become a beneficial owner of ~~Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration~~ any Voting Securities of the ~~Restricted Period. For the avoidance~~ Company which, together with all other Voting Securities of ~~doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension~~ which members of the ~~period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (~~Third Point Group and the ~~Investor will~~ Third Point Affiliates are beneficial owners, would be ~~permitted~~ deemed under Rule 13d-3(c) promulgated under the Exchange Act to ~~take the actions otherwise prohibited thereunder) if any~~ constitute a number of shares of Common Stock in excess of 10% of the ~~following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred~~ issued and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of ~~Issuer~~ Common Stock ~~or thirty-five percent (35%)~~ of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsCompany. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Director Nomination Agreement (Yahoo Inc)

Standstill. ~~(a) From~~ Subject to the ability of the Purchasers and ~~after~~ their Affiliates to purchase Capital Stock of the ~~date hereof~~Company pursuant to Section 4 of this Agreement, unless approved or requested by a majority of the ~~Investor will not~~Independent Directors, ~~and will cause each Investor Affiliate not to~~none of the Purchasers nor any of their Affiliates shall, directly or indirectly, acquire, seek to acquire, propose to acquire, or influence members of the Board or other stockholders of the Company to propose such Person's direct or indirect acquisition or beneficial ownership of any additional shares of Voting Stock or rights to acquire ~~Beneficial Ownership~~ additional shares of Voting Stock, including, without limitation, any Convertible Securities; provided, however, that notwithstanding the provisions of this Section 3.4, if the number of shares constituting Voting Stock is reduced or if the aggregate ownership of a Purchaser and its Affiliates is increased as a result of a recapitalization of the Company or as a result of any other action taken by the Company, neither such Purchaser nor its Affiliates shall be required to dispose of any of its holdings of Voting Stock even though such action may result in an increase in the number of shares of ~~Issuer Common Stock~~Voting Stock owned by such Purchaser and its Affiliates. The restrictions contained in this Section 3.4 shall terminate upon the earliest to occur of: (i) the termination of this Agreement; (ii) the termination of the DLCA in whole pursuant to Sections 12.3 and 12.4 thereof; provided, that such termination was not a result of Novartis's material breach thereunder, (iii) the mutual written agreement of Novartis and the Company, including ~~for purposes~~ a majority of ~~this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive~~ the Independent Directors; (iv) Purchasers and their ~~value (in whole or in part) from such Issuer Common~~ Affiliates owning more than 90% of the Voting Stock~~, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~; provided, however, that such ~~restriction on acquisitions will~~ Voting Stock was not ~~be applicable~~ acquired in violation of the terms of this Agreement; (v) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (together with ~~respect~~ any new directors whose election by such Board or whose nomination for election by the stockholders was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved by the directors then in office at the beginning of such period, other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in clauses (a), (b), (c) or (d) in the definition of Change in Control of the Company) ceasing for any reason to constitute a majority of the Board then in office (other than in connection with the transactions contemplated by the Purchase Agreement and the Ancillary Agreements); (vi) receipt by the Company or the Board of an unsolicited Acquisition Proposal or the public announcement by an Offeror of an unsolicited Acquisition Proposal; (vii) the acquisition by an Offeror of beneficial ownership of more than 20% of the ~~Investor Affiliates of Beneficial Ownership of Issuer Common~~ voting power represented by all Voting Stock (other than acquisitions by the Stockholders); or (viii) May 8, 2008. Nothing contained in this Section 3.4 shall prohibit Purchasers from (i) ~~pursuant to~~ seeking the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ approval of the ~~Investor~~ Independent Directors for a waiver of the prohibitions contained in this Section ~~4.2(d) hereof is not true and correct),~~ 3.4 for any acquisition of Voting Stock or (ii) ~~as a result~~ acquiring an amount of ~~any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to~~ Voting Stock from holders of ~~Issuer~~ Voting Stock (whether in open market transactions, private transactions or otherwise) or the Company, from time to time, such that the amount of Voting Stock to be acquired by such Purchaser plus the Voting Stock owned by Purchasers and their Affiliates does not exceed 51% of the Fully Diluted Common Stock Deemed Outstanding (~~or other equity securities~~ which shall not include any Voting Stock owned by Novartis BioVentures as of ~~the Issuer~~May 8, 2003 for purposes of this Section 3.4 only)~~, including rights offerings~~ . The parties hereto expressly acknowledge and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) agree that this Section 3.4 is not violated as a result of the ~~exercise (or exchange~~issuance of shares of Common Stock to Novartis pursuant to the Concurrent Private Placement Stock Purchase Agreement dated as of July 21, 2004, by and between Novartis and the Company, entered into pursuant to Section 4.7(d) of ~~any rights distributed by~~ the ~~Issuer~~ Stockholders' Agreement. The parties hereto further expressly acknowledge and agree that the issuance of shares of Common Stock to Novartis pursuant to ~~clause (ii) above~~the Par Value Stock Purchase Agreement, ~~(iv) in accordance with a Permitted Offer or (v) which has been~~ dated as of July 21, 2004, by and between the Company and Novartis is duly approved by a majority of the ~~Non-Investor Directors.~~ Independent Directors (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, defined in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(bStockholders' Agreement) and ~~no Third Party Offer~~ is ~~commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and~~ not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity violation of this Section ~~1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~3.4. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stockholders' Agreement (Idenix Pharmaceuticals Inc)

Standstill. (a) From and after the ~~date hereof~~Closing Date, ~~the Investor will~~ each of Buyer and Norilsk Nickel shall not, and ~~will~~ shall cause each ~~Investor Affiliate~~ other member of the Norilsk Nickel Group not to, alone or acting in concert with any other Person, acquire, offer to acquire, or agree to acquire, directly or indirectly, ~~acquire Beneficial Ownership of shares of Issuer~~ by purchase or otherwise, any Common ~~Stock, including for purposes of this Section 1.1(a), rights, options~~ Stock or other ~~derivative~~ securities or ~~contracts or instruments~~ rights to acquire ~~such ownership that derive their value (in whole~~ any Common Stock or ~~in part) from such Issuer Common Stock~~securities of the Company, ~~if, after giving effect to such acquisition,~~ or any assets of the ~~Investor’s Investor Percentage Interest would exceed~~ Company or any subsidiary or division thereof other than the ~~Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates~~ purchase of ~~Beneficial Ownership of Issuer~~ Common Stock (i) pursuant to the Stock Purchase ~~Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct)~~Agreement, (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to ~~a shareholder rights plan or similar plan or agreement,~~ the Offer and (iii) as ~~a result~~ may be necessary from time to time to maintain Ownership of fifty-one percent (51%) of the ~~exercise~~ outstanding voting securities of the Company until such time as Buyer ceases to own twenty-five percent (25%) or ~~exchange)~~ more of the outstanding voting securities of the Company. Notwithstanding the foregoing, Buyer, Norilsk Nickel or any ~~rights distributed~~ other member of the Norilsk Nickel Group may make an offer to the Company to acquire all or part of the outstanding assets or securities of the Company (other than such securities already Owned by the ~~Issuer~~ Norilsk Nickel Group), whether pursuant to ~~clause~~ a tender offer, merger, sale of assets, combination or similar transaction or series of transactions, if as a condition to the consummation of such acquisition (iiA) ~~above, (iv) in accordance with a Permitted Offer or (v) which has been approved by~~ prior written consent of a majority of the ~~Non-Investor~~ Public Directors is obtained, and (B) the Public Directors shall select in their sole discretion, and retain at the expense of the Company, independent financial advisors to review such transaction and provide an opinion regarding the fairness, from a financial point of view, of the financial terms of such transaction (and any consideration to be received in connection therewith) to the stockholders of the Company other than the Norilsk Nickel Group, which opinion shall have been received by the Public Directors. (b) ~~Notwithstanding~~ Without the prior written consent of a majority of the Public Directors (which consent shall not unreasonably be withheld or delayed), from and after the Closing Date, Buyer shall not, and Norilsk Nickel shall cause Buyer not to, directly or indirectly, Transfer to any Person any shares of Common Stock or other voting securities of the Company Owned by it if as a result of such Transfer any Person shall Own five percent (5%) or more of the Company's outstanding voting securities immediately following such Transfer; provided, however, that no such consent shall be required (i) with respect to a transfer to an Affiliate that agrees to be bound by the provisions of ~~Section 1.1(a)~~this Agreement, ~~at any time following~~ or (ii) from and after the ~~earlier~~ third (3rd) anniversary of ~~(x) ten (10) days following~~ the date ~~any Third Party commences~~ of this Agreement if (~~within~~ A) such transferee is a reputable Person in the ~~meaning of Section 14(d)~~ reasonable opinion of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actionsPublic Directors, (yB) such transferee agrees to be bound by the ~~date Issuer publicly recommends~~ provisions of this Agreement, without giving effect to Section 6.8 (it being understood that any such agreement shall be appropriately modified to account for transferee as a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203party), and (zC) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least Buyer gives thirty (30) days as prior written notice to the Company before any such Transfer, which notice shall include all relevant material terms of ~~such proposed offer, then in each case,~~ the ~~Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer~~ Transfer (~~such tender or exchange offer meeting~~ including the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 identity of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided hereintransferee). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Shareholder Agreement (Stillwater Mining Co /De/)

Standstill. During the period from and after the effectiveness of the Collaboration Agreement and expiring upon the expiration or termination of the Research Term, provided that (i) if the Research Term or the Collaboration Agreement is terminated by the Investor pursuant to Section 11.2 or Section 11.3 of the Collaboration Agreement, the expiration date shall be one (1) year after such termination and (ii) if as of the expiration or termination of the Research Term or the Collaboration Agreement the Standstill Parties (as defined below) beneficially own greater than nineteen and ninety-nine one hundredths percent (19.99%) of the Shares of Then Outstanding Common Stock, the expiration date shall be the earlier of (A) two (2) years following the date of such expiration or termination and (B) the date on which the Standstill Parties beneficially own less than fifteen percent (15%) of the Shares of Then Outstanding Common Stock (such period, the “Standstill Term”), neither the Investor nor any of its Controlled Affiliates (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Controlled Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of shares of ~~Issuer~~ Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes~~ except pursuant to (i) a stock split, stock dividend, recapitalization, reclassification or similar transaction of ~~this Section 1.1(a)~~the Company or (ii) a direct purchase from the Company, ~~rights~~or make a tender, ~~options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ shares of Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 3.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership~~ shares constituting Shares of ~~Issuer~~ Then Outstanding Common Stock ~~(i) pursuant to~~ is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of ~~any stock splits~~a repurchase by the Company of shares of Common Stock, stock ~~dividends~~ split, stock dividend or ~~other distributions or recapitalizations or similar offerings made generally available by~~ a recapitalization of the ~~Issuer or~~ Company, the Standstill Parties shall not be required to dispose of any ~~Subsidiary thereof to holders~~ of ~~Issuer~~ their holdings of shares of Common Stock and/or Common Stock Equivalents even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or ~~other equity securities~~ indirectly, seek to have called any meeting of the ~~Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities~~ stockholders of the ~~Issuer) as a result~~ Company, propose or nominate for election to the Company’s Board of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding~~ Company’s Board of Directors or cause to be voted in favor of such person for election to the ~~provisions~~ Company’s Board of ~~Section 1.1(a), at~~ Directors any ~~time following the earlier~~ shares of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer and/or Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretoEquivalents; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “~~solicitation” of “proxies~~Offeror” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is shall not an include the Investor ~~Affiliate (and not involving any breach of Section 1.1(d~~or its Affiliates)) the consummation of which would result in a Change of Control of the Company (an “Acquisition Proposal”); provided, however, that from and after the filing of a Schedule 14D-9 (or successor form of Tender Offer Solicitation/Recommendation Statement under Rule 14D-9 of the Exchange Act) by the Company recommending that stockholders accept any such offer, the Investor shall not be prohibited from taking any of the actions otherwise prohibited by this Section 3.1(c) for so long as the Company maintains and does not withdraw such recommendation; (d) directly or indirectly, solicit proxies or consents or become a participant in a solicitation (as such terms are defined in Regulation 14A under the Exchange Act) in opposition to the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to influence any Person, with respect to voting of any shares of Common Stock and/or Common Stock Equivalents; (e) deposit any shares of Common Stock and/or Common Stock Equivalents in a voting trust or subject any shares of Common Stock and/or Common Stock Equivalents to any arrangement or agreement with respect to the voting of such shares of Common Stock and/or Common Stock Equivalents; (f) propose (i) any merger, consolidation, business combination, tender ~~offer~~ or exchange offer, ~~if consummated~~purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any recapitalization, restructuring, liquidation or other extraordinary transaction with respect to the Company; (g) act in concert with any Third Party to take any action in clauses (a) through (f) above, or form, join or participate in a “partnership, limited partnership, syndicate, or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company; (h) enter into discussions, negotiations, arrangements or agreements with any Person relating to the foregoing actions referred to in (a) through (g) above; or (i) request or propose to the Company’s Board of Directors, any member(s) thereof or any officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause (i)); provided, however, that (A) nothing contained in this Section 3.1 shall prohibit the Investor from making confidential, unsolicited, non-public proposals to the Company for a transaction of the type described in the foregoing clause (f) that would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control ~~Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effectCompany, (B) ~~consent to~~ the ~~institution of,~~ mere voting in accordance with Section 5 hereof of any voting securities of the Company held by the Investor or ~~fail to contest in~~ its Controlled Affiliates shall not constitute a ~~timely and appropriate manner,~~ violation of any ~~proceeding or petition described in clause~~ of clauses (Aa) through (h) above, and (C) ~~apply for or consent~~ nothing contained in this Section 3.1 shall prohibit the Investor from proposing to the ~~appointment~~ applicable committee of ~~a receiver, trustee, custodian, sequestrator, conservator or similar official for~~ the ~~Issuer or any material Subsidiary or for a substantial part~~ Company’s Board of ~~its assets,~~ Directors (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees and not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior pursuant to the ~~execution of such agreement,~~ advance notice provisions set forth in the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%Company’s bylaws), in a confidential, non-public manner, potential director candidates for consideration by such committee, which candidates the ~~event (i)~~ Investor believes would be in the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion best interest of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, Company and ~~make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~its stockholders.

Appears in 1 contract

Samples: Investor Agreement (Regeneron Pharmaceuticals, Inc.)

Standstill. ~~(a) From and after~~ Each Stockholder agrees that, for so long as the ~~date hereof~~Stockholders collectively Beneficially Own at least 20% of the total voting power of the outstanding Voting Securities, ~~the Investor~~ such Stockholder will not, without the prior written consent and ~~will cause each Investor Affiliate not to~~approval of an independent and disinterested committee of the Board, directly or indirectly, and will cause its Controlled Affiliates not to: (a) acquire, solicit, offer or seek to acquire, agree to acquire ~~Beneficial Ownership~~ or make a proposal to acquire, by purchase or otherwise, either directly or indirectly, any equity securities of ~~shares of Issuer Common Stock~~the Company, or rights or options to acquire the foregoing, including Class A Shares or direct or indirect rights to acquire any Class A Shares, any securities convertible into or exchangeable for ~~purposes of this Section 1.1(a)~~any Class A Shares, ~~rights,~~ or any options or other derivative securities or contracts or instruments payment under which are determined with reference to the price of Class A Shares (but in any case excluding issuances by the Company of Class A Shares or options, warrants or other rights to acquire ~~such ownership that derive~~ Class A Shares (or the exercise thereof) to directors designated by the Majority Stockholders as compensation for their ~~value~~ membership on the Board); (~~in whole~~ b) make any proposal or ~~in part~~public statement inconsistent with any of the foregoing; (c) ~~from such Issuer Common Stock~~knowingly advise, ifknowingly assist, ~~after giving effect~~ knowingly encourage or knowingly instigate, or direct any Person to ~~such acquisition~~do, ~~the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable~~ or enter into any arrangements or agreements with any Person with respect to, any of the foregoing; (d) take any action that would or would reasonably be expected to require the ~~acquisition by~~ Company to make a public announcement regarding the ~~Investor Affiliates~~ events described in this Section 6.1; or (e) enter into any discussions, negotiations, communications, arrangements or understandings with any third party (including security holders of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to~~ the ~~Purchase Agreement (unless~~Company, but excluding, for the avoidance of doubt, the ~~representation~~ Stockholders) with respect to any of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offersforegoing, including, ~~if applicable~~without limitation, ~~Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight~~forming, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a ~~13D Group or otherwise acting~~ “group” (as defined in ~~concert with any Person, in each case, to exercise its rights under~~ Section ~~1.1(d)(ii)(B); (iv~~13(d)(3) ~~take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any~~ of the ~~types of matters set forth in clause (i~~Exchange Act) ~~above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements~~ with any third party with respect to the Company or any of its Subsidiaries or any Class A Shares or equity securities of the Company, or otherwise in connection with any of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~foregoing; provided, the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (providedhowever, that, subject to Section 6.2, nothing in ~~the event any matter described in clauses~~ this Section 6.1 will limit (i) any private proposals made to one or more independent and unaffiliated directors of the Board, the Chief Executive Officer of the Company or the Chairman of the Board (so long as the manner or content of any such communication would not reasonably be expected to require any public disclosure by any Person), (ii) any actions taken by the directors designated by the Majority Stockholders, or the ability of ~~this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing~~ such directors to ~~apply to the Investor, then~~vote or otherwise exercise his or her legal duties, in ~~the event the transaction related to such matter has not occurred within six (6) months~~ each case, in his or her capacity as a member of the ~~date on which~~ Board, (iii) any conversion of Class B Shares into Class A Shares or acquisition of Class A Shares upon conversion of Class B Shares, (iv) any acquisition of Class A Shares in accordance with the ~~Investor was released from such restrictions~~Merger Agreement, ~~then so long as such transaction~~ or (iv) any actions taken at the invitation of an independent and disinterested committee of the Board; provided, further, that, if at any time a Person that is not ~~being actively pursued at such time~~an Affiliate of the Company or the Stockholders enters into a definitive agreement with the Company or any of its Affiliates to acquire (or publicly offers to acquire in an offer that has been recommended by the Board) more than 50% of the outstanding Voting Securities of the Company, from and after the date thereof, the restrictions set forth in ~~Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to~~ this Section ~~1.1(f)): (i) in~~ 6.1 shall automatically terminate and cease to be of any effect. Notwithstanding the ~~event that a tender offer~~ foregoing, this Section 6.1 will not prevent or ~~exchange offer for at least thirty-five percent (35%)~~ impair the ability of the ~~Issuer Common Stock is commenced (within the meaning~~ Stockholders or any of ~~Section 14(d) of the Exchange Act) by a third Person which~~their Affiliates to acquire, ~~for the avoidance of doubt~~or seek or propose to acquire, ~~is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party~~ additional Class A Shares (or any ~~13D Group~~ securities convertible into or exchangeable for any such Class A Shares) representing less than 1% of ~~which~~ the Voting Securities of the Company (so long as such ~~third party is a member) becoming~~ acquisition would not result in the ~~Beneficial Owner~~ Stockholders, together with their Controlled Affiliates, beneficially owning Class A Shares and Class B Shares representing in excess of ~~securities representing greater than either thirty-five percent (35%)~~ 82% of the outstanding ~~shares~~ number of ~~Issuer Common Stock or thirty-five percent (35%)~~ Voting Securities of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%Company); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investor Rights Agreement (Chewy, Inc.)

Standstill. Each Investor agrees that during the Standstill Period, without the prior written approval of the Company or the Company Board, or as otherwise expressly permitted or contemplated by this Agreement, such Investor will not and will cause its respective controlled Affiliates not to: 3.1.1 acquire beneficial ownership of any securities (including in derivative form) of the Company or make any tender, exchange or other offer for such an acquisition, excluding, in the case of each Investor, acquisition of (a) ~~From~~ the Acquired Shares, (b) subject to the prior consent of the Company (which consent shall be deemed to have been granted if the Company does not affirmatively advise the applicable Investor that the Company withholds such consent within one Trading Day after receiving such request for consent, and ~~after~~ which consent may only be withheld if the ~~date hereof~~Company reasonably believes such acquisition of Capital Stock or other Equity Interests of the Company will be treated as an “ownership change” as defined in Section 382 of the Code), any Capital Stock or other Equity Interests of the Company acquired by the Investor ~~will not,~~ or its controlled Affiliates so long as the total beneficial ownership of the Investor and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (its controlled Affiliates in ~~whole or in part) from such Issuer Common Stock, if~~the Company’s voting securities, after giving effect to such acquisition, would not exceed 25% of the ~~Investor~~Company’s ~~Investor Percentage Interest would exceed~~ total voting power at such time and (c) any securities received from the ~~Cap; provided~~Company by way of dividend or distribution; 3.1.2 directly or indirectly, ~~however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock~~ (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company, or (ii) ~~as a result of~~ propose or nominate for election to the Board any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~Board or cause to be voted in favor of such person for election to the Board any Shares of Then Outstanding Common Stock; 3.1.3 directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group the consummation of which would result in a Change of Control (bother than as a seller on the same terms as the other holders of the Company’s Equity Securities) ~~Notwithstanding~~ (an “Business Combination”); provided, however, that from and after the ~~provisions~~ filing of ~~Section 1.1(a), at any time following the earlier~~ a Schedule 14D-9 (or successor form of ~~(x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) by the Company wherein a ~~tender or exchange offer which, if consummated, would result in~~ majority of the Board recommend that stockholders accept any such ~~Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period~~Business Combination, the ~~Issuer Board takes~~ Investors and their Affiliates shall not be prohibited from taking any of the actions otherwise prohibited by this Section 3.1.3 in connection with such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror Business Combination for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as the Board maintains and does not withdraw such ~~tender~~ recommendation; 3.1.4 directly or ~~exchange offer~~ indirectly, solicit proxies or consents or become a participant in a solicitation (as such ~~tender or exchange offer meeting the requirements set forth~~ terms are defined in ~~this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations~~ Regulation 14A under the Exchange ~~Act applicable~~ Act) in opposition to ~~tender or exchange offers, including, if applicable, Section 13(e)-3~~ the recommendation of a majority of the ~~Exchange Act and the related rules and regulations applicable thereto; (ii) is made~~ Company Board with respect to ~~all holders~~ any matter, or knowingly seek to advise or influence any Person, with respect to voting of ~~Issuer~~ any Shares of Then Outstanding Common Stock; ~~(iii) will expire no earlier than midnight, New York City time, on~~ 3.1.5 deposit any Shares of Then Outstanding Common Stock in a voting trust or subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the ~~twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act)~~voting of such Shares of Then Outstanding Common Stock; 3.1.6 propose (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (Ba) any ~~conditions to the consummation of such offer may be waived by the Investor in its sole discretion~~merger, ~~other than~~consolidation, ~~in the event no Third Party Offer is outstanding or is made~~business combination, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, ~~merger~~ purchase of the Company’s assets or ~~other business combination involving Issuer~~ businesses, or ~~any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination~~ similar transaction involving the ~~Issuer or any Subsidiary thereof~~ Company or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~b) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to ~~Issuer or any of its Subsidiaries~~the Company; ~~(ii) except as provided~~ 3.1.7 act in ~~Article 3, make or participate in, directly or indirectly,~~ concert with any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under~~ third party to take any action in the ~~Exchange Act) to vote~~preceding clauses 3.1.1 through 3.1.6, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) , other than any actions taken by ~~a third Person which~~the Investors related to negotiating, ~~for~~ entering into and exercising the ~~avoidance of doubt~~rights under this Agreement, ~~is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (~~the Securities Purchase Agreements or any ~~13D Group~~ document entered into in connection with any of ~~which such third party is~~ the foregoing; 3.1.8 enter into discussions, negotiations, arrangements or agreements with any Person relating to the foregoing actions referred to in the preceding clauses 3.1.1 through 3.1.7; or 3.1.9 request or propose to the Company Board, any member(s) thereof or any officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause 3.1.9); provided, however, that nothing in this Section 3.1 shall limit (i) the ability of the Investors and their permitted transferees’ ability to make a ~~member) becoming the Beneficial Owner~~ pledge of securities ~~representing greater than either thirty-five percent~~ (~~35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer~~subject to Section 2.1), and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the ~~Issuer solicits from one~~ rights available (including the enforcement of such rights) to the Investors and their respective Affiliates under this Agreement, the Securities Purchase Agreements or ~~more Persons~~any document entered into in connection with any of the foregoing, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) ~~subject to~~ the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer Investors or any ~~material Subsidiary~~ of their Affiliates or ~~its debts~~their respective directors, executive officers, partners, principals, employees or ~~of a substantial part of its assets~~managing members or agents (acting in such capacity) from communicating privately with the Company’s directors, ~~under any federal, state~~ officers or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and advisors so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions withsuch communications are not intended to, and ~~make private proposals~~ would not reasonably be expected to, ~~the Issuer Board or management~~ require any public disclosure of ~~the Issuer with respect to~~ such ~~proposed transaction or a competing proposal by the Investor~~communications.

Appears in 1 contract

Samples: Investor Rights Agreement (GTT Communications, Inc.)

Standstill. The Executive covenants and agrees that during the Term and thereafter through the second anniversary of his Date of Termination (~~a) From and after the date hereof~~such period, the ~~Investor~~ “Standstill Period”), without the prior written consent of the Company, the Executive will ~~not, and will cause each Investor Affiliate~~ not toat any time, directly or indirectly, ~~acquire~~ acquire, make any proposal or offer to acquire, or propose or facilitate the acquisition of, directly or indirectly, by purchase or otherwise, record or Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the ~~Issuer)~~Ashford-Related Entities, ~~including rights offerings and distributions made generally to holders~~ or securities of ~~Issuer Common Stock (~~any of the Ashford-Related Entities that are convertible, exchangeable, redeemable or ~~other~~ exercisable into such equity securities except those granted to him as contemplated by this Agreement. During the Standstill Period, without the prior written consent of the ~~Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of~~ Company, the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), Executive covenants and agrees that he will not at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter ~~into~~ into, agree to enter into, commence or ~~agree~~submit any merger, ~~effect~~ consolidation, tender offer, exchange offer, business combination, share exchange, recapitalization, restructuring or ~~seek, offer or propose (whether publicly or otherwise) to effect~~other extraordinary transaction involving any of the Ashford-Related Entities, or ~~announce~~ any ~~intention~~ subsidiary or division thereof, or any of their respective securities or assets or take any action that would reasonably be expected to ~~effect or cause or participate in or in~~ require any ~~way assist, facilitate or encourage any other Person~~ of the Ashford-Related Entities to ~~effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to~~ make a public announcement regarding the ~~extent otherwise specifically permitted by this Agreement, any acquisition~~ possibility of any ~~Issuer Common Stock~~ such transaction; (~~or Beneficial Ownership thereof~~ii) or tender any ~~material portion~~ equity securities of the ~~assets of Issuer and its Subsidiaries (taken together); (B) any~~ Ashford-Related Entities into a tender or exchange ~~offer, merger or~~ offer commenced by a third party other ~~business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any~~ than a tender or exchange ~~offer~~offer that the Board of Directors of one of the Ashford-Related Entities has affirmatively publicly recommended to such Ashford-Related Entity’s stockholders that such stockholders tender into such offer and has not publicly withdrawn or changed such recommendation (and in the case of such a withdrawal or change of recommendation, ~~merger~~ it shall not be a breach of this clause (ii) if the tendered or ~~other business combination involving~~ exchanged securities are withdrawn prior to the ~~Issuer or any Subsidiary thereof or (y) Transferring any shares~~ expiration of ~~Issuer Common Stock pursuant to~~ such tender or exchange offer~~, merger or other business combination~~)~~; or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries~~; (iiiii) ~~except as provided~~ (x) make, or in ~~Article 3, make or~~ any way participate in~~, directly or indirectly~~, any “solicitation” of “proxies” (as such terms are ~~defined under Regulation 14A under~~ used in the proxy rules of the Securities and Exchange Commission (the “SEC”) promulgated pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) to ~~vote~~vote any securities of any of the Ashford-Related Entities under any circumstances, or deposit any securities of any of the Ashford-Related Entities in a voting trust or subject them to a voting agreement, pooling agreement or other agreement of similar effect, (y) seek to advise or influence any ~~Person or entity~~ person with respect to the voting ~~of,~~ of any ~~Issuer Common Stock or~~ securities of any ~~demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ the Ashford-Related Entities (other than to vote as recommended by Board of Directors of any of the Ashford-Related Entities), or (z) grant any proxy with respect to ~~matters related~~ any equity interests of any of the Ashford-Related Entities (other than to the ~~Investor’s exercise~~ applicable Ashford-Related Entity or ~~enforcement~~ a person specified by such Ashford-Related Entity in a proxy card provided to stockholders of ~~rights under the Purchase Agreement~~such Ashford-Related Entity), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (~~iii~~iv) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group~~ “group” (as that term is used for purposes of Rule 13d-5 or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to ~~a Change~~ any equity securities of ~~Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ any of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%)Ashford-Related Entities; (v) form or publicly disclose any intention, plan or arrangement to change any of the ~~Investor Percentage Interest is greater than fifty percent (50%)~~members of the Board of Directors or executive officers of any of the Ashford-Related Entities, any of the executive officers of any Ashford-Related Entity, or any of the governing documents of any of the Ashford-Related Entities; (vi) ~~an involuntary proceeding shall be commenced~~ call, request the calling of, or ~~an involuntary petition shall be filed seeking (x) liquidation~~otherwise seek or submit a written request for the calling of a special meeting of, ~~reorganization~~ or ~~other relief in respect~~ initiate any stockholder proposal for the election of ~~the Issuer~~ any director or any ~~material Subsidiary or its debts~~other action by, or the stockholders of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the ~~foregoing shall be entered~~Ashford-Related Entities; (vii) make a public announcement in connection with seeking to influence or control the management of the Board of Directors, or the policies, affairs or strategy of any of the Ashford-Related Entities; (viii) form or disclose any intention, plan or arrangement inconsistent with the foregoing; (ix) advise, assist or encourage, or enter into any arrangements with, any other persons in connection with any of the matters set forth in this Section 10(c); or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) ~~a Change~~ publicly request the Company to amend or waive any provision of ~~Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to~~ this Section ~~1.1(g~~10(c), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Employment Agreement (Ashford Inc.)

Standstill. ~~(a) From and after~~ During the ~~date hereof~~Standstill Period, the ~~Investor will not~~Investor, ~~and will cause each Investor Affiliate~~ or any of its Affiliates, shall not ~~to,~~ directly or indirectly, except as expressly invited in writing by the Company: (i) subject to Section 5.16, without the express consent of the Company, acquire ~~Beneficial Ownership~~ any additional equity securities (including Ordinary Shares, American Depositary Shares and Ordinary Share Equivalents) of ~~shares~~ the Company or any instrument that gives the Investor or any of ~~Issuer Common Stock, including for purposes~~ its Affiliates the economic equivalent of ~~this Section 1.1(a), rights, options or other derivative~~ ownership of an amount of securities ~~or contracts or instruments to acquire such ownership that derive their value~~ of the Company (~~in whole or in part~~a “Derivative”) ~~from such Issuer Common Stock,~~ if, after ~~giving effect to~~ such acquisition, the ~~Investor~~Investor would beneficially own more than twenty one percent (21.0%) of the Company’s ~~Investor Percentage Interest would exceed the Cap;~~ outstanding share capital; (ii) knowingly encourage or support a tender, exchange or other offer or proposal by a Third Party, provided, however, that from and after the filing of a Schedule 14D-9 (or successor form of Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) by the Company recommending that stockholders accept any such ~~restriction on acquisitions will~~ offer filed after such offer has commenced, the Investor shall not be ~~applicable~~ prohibited from taking any of the actions otherwise prohibited by this clause (ii) for so long as the Company maintains and does not withdraw such recommendation; (iii) propose (x) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (y) any recapitalization, restructuring, liquidation or other extraordinary transaction with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, Company; (iv) ~~in accordance with a Permitted Offer~~ seek to have called any meeting of the shareholders of the Company, propose or ~~(v) which~~ nominate for election to the Company’s board of directors any person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~ Company’s board of directors (bexcluding the Designated Director, if any) ~~Notwithstanding~~ or cause to be voted in favor of such person for election to the ~~provisions~~ Company’s board of ~~Section 1.1(a), at~~ directors any ~~time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ Ordinary Shares or American Depositary Shares of the ~~Exchange Act) a tender~~ then outstanding share capital of the Company or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) Ordinary Share Equivalents (including ~~granting an exception in respect of such Third Party Offer under~~ any ~~shareholder rights plan or granting approval of such offeror for purposes of DGCL~~ Derivatives) other than as contemplated by Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto5.3 hereof; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) ~~provides for consideration payable~~ solicit proxies or consents or become a participant in ~~cash, common stock or other securities of the Investor or~~ a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s board of directors with respect to any matter, or seek to advise or influence any ~~Person~~ Third Party, with respect to voting of any Ordinary Shares or ~~entity~~ American Depositary Shares of the then outstanding share capital of the Company or Ordinary Share Equivalents (including any Derivatives); (vi) deposit any Ordinary Shares or American Depositary Shares of the then outstanding share capital of the Company or Ordinary Share Equivalents in a voting trust or subject any Ordinary Shares or American Depositary Shares of the then outstanding share capital of the Company or Ordinary Share Equivalents to any arrangement or agreement with respect to the voting ~~of, any Issuer Common Stock~~ of such Ordinary Shares or ~~any demand for a copy~~ American Depositary Shares of ~~Issuer’s stock ledger, list~~ the then outstanding share capital of ~~stockholders~~ the Company or ~~any other books and records of Issuer (~~Ordinary Share Equivalents other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules;contemplated by Section 5.3 hereof; or (~~iii~~vii) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise~~ act in concert with any ~~Person, in each case, with respect~~ Third Party to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) through (vi) above, or ~~(ii) of this Section 1.1(f) has occurred and resulted~~ form or join in ~~the restrictions imposed under Section 1.1(d) (~~a “partnership, limited partnership, syndicate, or other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance group” with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (any Third Party within the meaning of Section ~~14(d~~13(d)(3) of the Exchange ~~Act~~Act with respect to the equity securities (including any Derivatives) of the Company. Notwithstanding the foregoing, (A) the mere voting in accordance with Section 5.3 hereof of any voting securities of the Company held by the Investor or its Affiliates shall not constitute a violation of any of clauses (i) through (vii) above, (B) nothing in this Agreement shall prohibit the Investor or any of its Affiliates from submitting to the board of directors of the Company or to management of the Company a confidential proposal for a transaction involving a Change of Control or other proposed action, provided that neither the Company nor the Investor or any of its Affiliates is required to publicly disclose the fact that such proposal or request to consider such a proposal was made, (C) if any executive officer or director of the Investor serves as a member of the Company’s board of directors, any action he or she takes in the performance of his or her duties as a member of the Company’s board of directors shall not be deemed to violate this Section 5.1, and (D) the provisions of this Section 5.1 shall terminate and be of no further force or effect if (i) the Company publicly announces the entry into a definitive agreement for the acquisition of the Company or more than fifty percent (50%) of its consolidated assets by a third ~~Person which~~party, ~~for the avoidance of doubt, is not an Investor Affiliate~~ or (~~and not involving~~ ii) any ~~breach of Section 1.1(d)) which~~ person commences a tender ~~offer~~ or exchange ~~offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming~~ offer with respect to the ~~Beneficial Owner of~~ securities representing ~~greater than either thirty-five~~ fifty percent (3550%) ~~of the outstanding shares of Issuer Common Stock~~ or ~~thirty-five percent (35%)~~ more of the voting power of the ~~Issuer~~Company, ~~and either (1)~~ unless the ~~Issuer Board recommends that the stockholders~~ Company files a recommendation statement under Rule 14d-9 of the ~~Issuer tender their shares in response to~~ Exchange Act (or such successor provision) with the SEC within 10 business days following commencement of such offer ~~or does not recommend against~~ advising the ~~tender~~ Company’s stockholders to reject such offer ~~or exchange offer within ten~~ (10provided that if any transaction referred to in the foregoing clauses (i) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; and (ii) is terminated or abandoned, then the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change~~ provisions of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under this Section ~~3.2, in~~ 5.1 shall again become effective). In the event that the ~~Persons designated by the Investor to be elected~~ Company engages in discussions or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of negotiations involving a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) possible Change of Control ~~Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to~~ of the ~~execution of such agreement~~Company, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be ~~entitled~~ given notice thereof and the right to ~~engage~~ participate in ~~private discussions with, and make private proposals to,~~ any process on substantially the ~~Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~same terms as other participants.

Appears in 1 contract

Samples: Share Purchase Agreement (Amgen Inc)

Standstill. For two years after the Closing Date, none of Buyer, the JEDI Entities or their respective Subsidiaries (a) ~~From and after the date hereof, the Investor~~ will ~~not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of~~ purchase any additional shares of ~~Issuer~~ Common Stock, ~~including~~ or securities convertible into or exchangeable for ~~purposes~~ shares of ~~this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer~~ Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock other than (i) ~~pursuant to~~ in transactions approved by the ~~Purchase Agreement (unless, for the avoidance~~ Board of ~~doubt, the representation~~ Directors of ~~the Investor in Section 4.2(d) hereof is not true and correct)~~Seller, (ii) ~~as a result~~ the purchase of ~~any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders~~ shares of ~~Issuer~~ Common Stock ~~(or other equity securities of~~ in connection with the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreementGrand Gulf Transaction acquisition, (iii) the purchase of shares of Common Stock pursuant to the provisions of Section 8.12 hereof, or (iv) an Inadvertant Purchase, and (b) make or participate in making any solicitation of proxies to vote Common Stock of Seller or form, join or participate in a "group" for the purpose of the foregoing without the approval of the Board of Directors of the Seller. Notwithstanding anything herein to the contrary, the provisions of this Section 8.5 shall terminate and have no further force or effect if (x) at any time in which Buyer and its Affiliates hold more than 14% of the issued and outstanding shares of Common Stock, less than two designees of Buyer are elected to Seller's Board of Directors within 30 days after Buyer has requested the nomination and election of such designees, or (y) at any time in which Buyer and its Affiliates hold in the range of 7% through 14% of the issued and outstanding shares of Common Stock, one designee of Buyer is not elected to Seller's Board of Directors within 30 days after Buyer has requested the nomination and election of such designee (including as a result of the death or voluntary resignation of such a designee). Other than as expressly provided herein, Buyer will be free to exercise (its rights as a stockholder, voting or ~~exchange)~~ otherwise, and regardless of ~~any~~ whether the exercise of such rights ~~distributed by~~ might influence management, the ~~Issuer pursuant to clause (ii) above, (iv)~~ Board of Directors or the stockholders of Seller. Buyer agrees that in ~~accordance with a Permitted Offer or (v) which has been approved by a majority~~ the event that it transfers more than 10% of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ issued and outstanding shares of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (~~or other equity securities) having Majority Voting Power (~~determined as of the time of such ~~offer, a “Third Party Offer”~~transfer), ~~unless during such ten (10) day period,~~ then the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect transferee of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in~~ shares shall be bound by the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements restrictions set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions 8.5 to the ~~obligation of~~ extent the ~~Investor Affiliates to purchase Issuer Common Stock; provided, that, (A)~~ same are in ~~the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b)~~ full force and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding effect at the time of ~~commencement that are not Beneficially Owned by the Investor Affiliates as of the date~~ such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offertransfer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stock Purchase Agreement (Sheridan Energy Inc)

Standstill. (a) ~~From~~ Subject to Section 3(b) hereof, each member of the Barington Group jointly and ~~after~~ severally agrees that during the period commencing on the date ~~hereof~~hereof and ending on the Termination Date, without the ~~Investor~~ prior written consent of the Board specifically expressed in a written resolution adopted by a majority vote of the entire Board, he, she or it will not, and will cause each ~~Investor Affiliate~~ of his, her or its Affiliates, Associates, employees, agents and other Persons acting on his, her or its behalf not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock : (i) ~~pursuant~~ acquire, offer or propose to ~~the Purchase Agreement~~ acquire, or agree to acquire (~~unless, for the avoidance~~ except by way of ~~doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits,~~ stock dividends or other distributions or ~~recapitalizations or similar~~ offerings made ~~generally~~ available ~~by the Issuer or any Subsidiary thereof~~ to holders of ~~Issuer Common Stock~~ Voting Securities generally on a pro rata basis, provided that any such securities so received shall be subject to the provisions hereof), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another Person (as such term is defined in Section 14), by joining a partnership, limited partnership, syndicate or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences "group" (within the meaning of Section ~~14(d~~13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or otherwise, any Voting Securities, if after giving effect to such acquisition the Barington Group (by itself or with any other Person with whom it has any agreement, understanding or arrangement with respect to Voting Securities) would beneficially own more than 9.9% of the outstanding Voting Securities; provided, however, no sales by any member of the Barington Group shall be required if the increase in the beneficial ownership of Voting Securities over 9.9% of the outstanding Voting Securities results exclusively from a reduction in the number of outstanding Voting Securities by reason of the Company's repurchase of Common Stock; provided, that no member of the Barington Group acquires any additional Voting Securities following disclosure by the Company of information indicating that the Barington Group beneficially owns in excess of 9.9% of the outstanding Voting Securities. For the purposes of computing the beneficial ownership of the Barington Group at the time of any purchase, the number of outstanding Voting Securities shall be determined by the latest available Company filing with the Securities and Exchange Commission (the "SEC"). (ii) engage, or in any way participate, directly or indirectly, in any "solicitation" (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) ~~a tender~~ of proxies or ~~exchange offer which, if consummated, would result in such Person becoming~~ consents (whether or not relating to the ~~Beneficial Owner~~ election or removal of ~~Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”~~directors), ~~unless during~~ seek to advise, encourage or influence any Person with respect to the voting of any Voting Securities; initiate, propose or otherwise "solicit" (as such ~~ten (10~~term is defined in Rule 14a-1(l) ~~day period,~~ promulgated by the ~~Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict~~ SEC under the ~~purchase~~ Exchange Act) stockholders of ~~Issuer Common Stock (or other equity securities)~~ the Company for the approval of stockholder proposals whether made pursuant to ~~such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer~~ Rule 14a-8 or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations Rule 14a-4 under the Exchange Act ~~applicable~~ or otherwise; induce or attempt to ~~tender~~ induce any other Person to initiate any such stockholder proposal; or ~~exchange offers, including, if applicable, Section 13(e)-3 of~~ otherwise communicate with the Company's stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange ~~Act and~~ Act; or participate in, or take any action pursuant to, any "shareholder access" proposal which may be adopted by the ~~related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock~~SEC, whether in accordance with proposed Rule 14a-11 or otherwise; (iii) ~~will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof~~ except as required pursuant to Item 4 of Schedule 13D in connection with a Disposition (as ~~determined using Rule 14d-1(g)(3~~hereinafter defined) of Voting Securities expressly permitted under Section 3(b) of this Agreement, seek, propose or make any statements with respect to, any merger, consolidation, business combination, tender or exchange offer, sale or purchase of assets, sale or purchase of securities, dissolution, liquidation, restructuring, recapitalization or similar transactions involving the ~~Exchange Act)~~Company or any of its Affiliates, provided that the Barington Group may publicly express its opinion with respect to any such announced merger, consolidation or business combination; (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in any "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting Securities, other than a ~~13D Group~~ "group" that includes all or ~~otherwise act~~ some lesser number of the Persons identified as "Reporting Persons" in ~~concert with~~ the Schedule 13D, but does not include any ~~Person,~~ other members who are not currently identified as Reporting Persons; (v) deposit any Voting Securities in ~~each case,~~ any voting trust or subject any Voting Securities to any arrangement or agreement with respect to the ~~Issuer Common Stock~~voting of any Voting Securities, ~~or seek~~except as expressly set forth in this Agreement; (vi) otherwise act, ~~propose or otherwise act~~ alone or in concert with others, to control or seek to control or influence or ~~control Issuer’s~~ seek to influence the management, the ~~Issuer~~ Board or ~~policies~~policies of the Company, except ~~that~~ as otherwise expressly permitted in this ~~subsection does not restrict~~ Agreement; (xvii) ~~the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining~~ seek, alone or ~~in any way participating in a 13D Group or otherwise acting~~ in concert with others, (a) to call a meeting of stockholders or solicit consents from stockholders, (b) to obtain representation on the Board, or (c) to effect the removal of any ~~Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B)~~member of the Board; (ivviii) ~~take~~ make any ~~action which would~~ proposal (including publicly disclose or ~~would reasonably be expected to force Issuer to make a public announcement~~ discuss any proposal) or enter into any discussion regarding any of the ~~types~~ foregoing, or make any proposal, statement or inquiry, or disclose any intention, plan or arrangement (whether written or oral) inconsistent with the foregoing, or make or disclose any request to amend, waive or terminate any provision of ~~matters set forth in clause (i) above~~this Agreement; (vix) ~~bring~~ have any ~~action~~discussions or communications, or ~~otherwise act~~enter into any arrangements, understanding or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other Person in connection with any of the foregoing, or make any investment in or enter into any arrangement with, any other Person that engages, or offers or proposes to ~~contest~~ engage, in any of the ~~validity of this Section 1.1(d)~~foregoing; or (vix) ~~enter into~~ take or cause or induce others to take any ~~discussions or arrangements~~ action inconsistent with ~~any third party with respect to~~ any of the ~~foregoing (except as otherwise expressly provided herein)~~foregoing. (eb) ~~Unless earlier terminated or made inapplicable pursuant~~ If the Company's announced, actual basic earnings per share for the three quarters ended September 30, 2005 fail to ~~Section 1.1(f)~~exceed 90% of the Expected Per Share Earnings Level (as hereinafter defined) for such nine-month period, the Barington Group shall be relieved from compliance with the provisions of Section ~~1.1(d~~3(a) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply hereof solely to the ~~Investor, then, in~~ extent necessary to permit it to nominate a single candidate for election to the ~~event the transaction related~~ Board as a director to ~~such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long~~ run as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend "short slate" against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s 's slate of nominees for the Company's 2006 Annual Meeting of Stockholders (the "2006 Annual Meeting") and to solicit proxies in support of such candidate for election to the ~~Issuer Board at~~ Board, as well as to request a shareholder list and related information and make any ~~Election Meeting or (y) if so nominated are not so elected~~ and all filings and/or announcements necessary in the sole discretion of the Barington Group, in connection with such nomination, and to vote all Voting Securities then beneficially owned in favor of the election of such candidate to the ~~Issuer Board, or~~ Board and against one nominee on the ~~Issuer otherwise breaches its obligations under Article 3;~~ slate nominated by the Board for the 2006 Annual Meeting. The term Expected Per Share Earnings Level means for all purposes herein the product of (iv1) times (2) where (1) is 65% and (2) is the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect lower end of the ~~Issuer or any material Subsidiary or~~ Estimated Per Share Earnings Range (as hereinafter defined). The term "Estimated Per Share Earnings Range" shall mean the range of full year estimated earnings per share which the Company will publicly announce at its ~~debts~~next scheduled quarterly conference call scheduled to occur on March 1, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors2005. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Steven Madden, Ltd.)

Standstill. 2.1 Until such time as the Teads Stockholders together with their Affiliates hold in the aggregate less than 15% of the total voting power of the outstanding capital stock of the Company determined on an as-converted basis (the “Standstill Period”), without the prior written approval of the Board to be given in its discretion, the Teads Stockholders shall not, and shall cause their Affiliates that are Entities (and anyone acting on behalf of any such Persons) as well as a controlling individual shareholder of a Teads Stockholder, but excluding such Affiliates’ directors and officers, other than in their capacity as such on behalf of Seller or its Affiliates that are Entities or as a controlling individual shareholder, not to: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to~~acquire or agree to acquire or make any proposal to acquire, directly or indirectly, ~~acquire~~ Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer any Common Stock (iincluding in derivative form) ~~pursuant~~ other than the Acquisition Stock and other than in connection with a stock split, stock dividend, Preferred Stock conversion, or similar transaction (including as contemplated by the Certificate of Designation of Series A Convertible Preferred Shares of Outbrain Inc. (the “Certificate of Designation”)); provided that, subject to compliance with applicable securities laws, nothing in this Agreement (including but not limited to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth restrictions in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii2) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced prohibit or ~~made during the period~~ restrict such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its Teads Stockholders and their ~~respective Representatives acting on behalf of Investor~~ Affiliates from negotiating, evaluating or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate intrading, directly or indirectly, in any ~~“solicitation”~~ index, exchange traded fund, benchmark or other basket of ~~“proxies” (as such terms are defined under Regulation 14A under~~ securities which may contain or otherwise reflect the ~~Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting~~ performance of, any ~~Issuer Common Stock~~ securities or indebtedness of the Company or any ~~demand for a copy~~ of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesits subsidiaries; (~~iii~~b) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict “group” (~~x) the Investor Directors from participating~~ as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights defined under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d13(d) of the Exchange Act~~) by a third Person which~~), for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to ~~a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ any equity securities of the ~~Issuer Board;~~ Company (~~iii) subject~~ other than a “group” solely including the Teads Stockholders and their Affiliates with respect to ~~the obligations~~ any securities of the ~~Investor under Section 3.2, in the event that the Persons designated~~ Company now or hereafter owned by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%them); (vc) ~~the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced~~ call or ~~an involuntary petition shall be filed seeking (x) liquidation, reorganization~~ seek to have called any annual or ~~other relief in respect~~ special meeting of the ~~Issuer~~ Company’s stockholders (each a “Stockholders’ Meeting”) or present or seek to present at any ~~material Subsidiary or its debts, or of a substantial part of its assets, under~~ Stockholders’ Meeting any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official proposal for ~~the Issuer or any material Subsidiary~~ consideration for action by stockholders or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal discussion only by the ~~Investor.~~stockholders;

Appears in 1 contract

Samples: Share Purchase Agreement (Outbrain Inc.)

Standstill. (a) ~~From and after~~ At all times prior to the ~~date hereof~~Early Termination Date, ~~the Investor will~~ Apollo shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its Affiliates not to, ~~directly~~ acquire or ~~indirectly~~agree to acquire, ~~acquire Beneficial Ownership~~ by purchase or otherwise, any Voting Securities of the Company or any of its Affiliates, other than: (i) the Converted Shares, or an acquisition as a result of a stock split, stock dividend or similar recapitalization, (ii) acquisitions of Voting Securities that together with all Voting Securities owned by Apollo and its Affiliates do not exceed 15% of the Total Voting Power, (iii) stock options or similar rights granted as compensation for performance as a director or officer of the Company or its Subsidiaries (and any shares ~~of Issuer Common Stock, including for purposes of this Section 1.1(a~~issuable upon exercise thereof), (iv) transfers between or among the Apollo Entities, (v) any rights that are granted to all Stockholders (and any shares issuable upon exercise thereof), ~~rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value~~ and (~~in whole or in part~~vi) ~~from such Issuer Common Stock, if, after giving effect to such acquisition,~~ acquisitions of Voting Securities approved by the ~~Investor’s Investor Percentage Interest would exceed the Cap~~Company; provided, however, that (A) if Apollo or any of its Affiliates in good faith inadvertently acquires Voting Securities in violation of these provisions and within 30 business days after the first date on which it has actual knowledge (including by way of written notice given by the Company) that a violation has occurred Apollo or any of its Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that Apollo and its Affiliates no longer beneficially own any such ~~restriction on acquisitions will~~ shares or have any agreement or understanding relating to such shares, this Section 5(a) shall be deemed to not have been violated; and (B) no violation of this provision shall be ~~applicable~~ deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (x) investments in investment funds as to which Apollo has no control or power to control with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends voting or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer investment decisions or (vy) ~~which has been approved~~ acquisitions of securities by a ~~majority of the Non-Investor Directors.~~limited partner in Apollo or an Affiliate thereof as to which limited partner Apollo has no control or power to control; (b) ~~Notwithstanding~~ The obligations of Stockholders under Section 5(a) shall terminate on the ~~provisions of Section 1.1(a), at any time following~~ first date (the ~~earlier of (x~~"Early Termination Date') ~~ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ on which either of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectlyevents occurs: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: The earlier of (A) ~~except to~~ any time after the ~~extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion~~ fifth anniversary of the ~~assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer~~Closing Date, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in Shares represent the ~~event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ lesser of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) ~~the Issuer Board recommends that the stockholders~~ 3% of the ~~Issuer tender their shares~~ fully diluted equity interests in ~~response~~ the Company (calculated giving effect to ~~such offer~~ the exercise of all outstanding options, warrants and other rights to purchase or ~~does not recommend against~~ acquire any Equity Interests of the ~~tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or~~ Company), and (2) ~~the Issuer Board later publicly recommends that the stockholders~~ one million (1,000,000) shares of ~~the Issuer tender their shares in response to such offer;~~Common Stock; and (B) [__________], 2008. (ii) If the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself andCompany shall, in ~~such event~~breach of its obligations under this Agreement, ~~such announcement is made with the approval of the Issuer Board; (iii) subject~~ fail to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees nominate for election to the ~~Issuer~~ Board ~~at any Election Meeting or (y) if so nominated are not so elected to~~ the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor designee set forth by Apollo pursuant to Section ~~1.1(g~~3(a), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investors Agreement (Apollo Investment Fund Iv Lp)

Standstill. ~~(a) From and after~~ Piton agrees that from the date ~~hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes~~ of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, Agreement until the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates earliest of ~~Beneficial Ownership of Issuer Common Stock~~ (i) ~~pursuant to~~ the ~~Purchase Agreement (unless, for~~ day that immediately follows the ~~avoidance of doubt, the representation~~ date of the ~~Investor in Section 4.2(d) hereof is not true and correct),~~ 2020 Annual Meeting; (ii) 180 days following the date that the Board accepts the Piton Designee’s resignation due to Piton failing to satisfy the Piton Minimum Ownership Threshold (other than as a result of ~~any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available~~ issuances of Common Stock by the ~~Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of~~ Company after {B1246652.1} the ~~Issuer~~date hereof)~~, including rights offerings~~ ; and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) ~~as a result~~ 60 days following the Company’s receipt of (a) written notice from Piton of the ~~exercise (or exchange)~~ Company’s material breach of any ~~rights distributed~~ warranty set forth in Section 10(c) below (such written notice, to be delivered to the Company by ~~the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority~~ Piton within 30 days of the ~~Non-Investor Directors.~~ Piton Designee’s becoming aware of the facts or circumstances constituting such breach and setting forth such facts or circumstances in reasonable detail), which breach is not cured within 30 days of the Company’s receipt of such written notice and (b) ~~Notwithstanding~~ the ~~provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ written resignation of the ~~Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming~~ Piton Designee from the ~~Beneficial Owner~~ Board and any committee of ~~Issuer Common Stock (or other equity securities) having Majority Voting Power~~ the Board on which the Piton Designee serves (such ~~offer~~earliest date, a the “~~Third Party Offer~~Termination Date”), ~~unless during such ten (10) day period~~without the prior written consent of the Board, ~~the Issuer Board takes such actions as are reasonably necessary to prevent~~Piton Partners and Kokino shall not, ~~delay, or restrict the purchase~~ and shall cause each of ~~Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan~~ their Affiliates and ~~other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x)~~ Associates (including ~~granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203~~the Piton Designee), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is madeto, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (a) (i) ~~enter into~~ acquire, offer or ~~agree~~agree to acquire, or acquire rights to acquire (except by way of stock dividends or other distributions or offerings made available to holders of voting securities of the Company generally on a pro rata basis), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any voting securities of the Company or any voting rights decoupled from the underlying voting securities which would result in the ownership or control of, or other beneficial ownership interest in more than 12.5% of the then outstanding shares of Common Stock in the aggregate (the “Ownership Cap”), provided, however, that the restriction under this Section 3(a)(i) may be waived upon a resolution of the majority of the directors on the Board, other than the Piton Designee, each of whom is an “Independent Director” pursuant to Rule 5605(a)(2) under the NASDAQ listing rules, to accept Piton’s request in writing to beneficially own shares of Common Stock in excess of the Ownership Cap; or (ii) other than in open market sale transactions where the identity of the purchaser is not known or in underwritten widely dispersed public offerings or in connection with any Extraordinary Transaction recommended by the Board, knowingly sell, offer or agree to sell, through swap or hedging transactions or otherwise, the voting securities of the Company or any voting rights decoupled from the underlying voting securities held by Piton to any Third Party that has, or would have as a result of such transaction, a beneficial ownership interest of more than 5.0% of the then outstanding shares of Common Stock; (b) (%3) seek or submit, or encourage any person or entity to seek or submit nominations or give notice of an intent to nominate a person for election at any Stockholder Meeting at which the notice includes election of the Company’s directors; (%3) initiate, encourage or participate in any solicitation of proxies or consents in respect of any election contest or removal contest with respect to the Company’s directors; (%3) submit any proposal for consideration at, or bring any other business before, any Stockholder Meeting; (%3) initiate, encourage or participate in any solicitation of proxies in respect of any stockholder proposal for consideration at, or other business brought before, any Stockholder Meeting; (%3) initiate, encourage or participate in any “withhold” or similar campaign with respect to any Stockholder Meeting; or (%3) request, or initiate, encourage or participate in any request to call, a special meeting of the Company’s stockholders; (c) form, join or in any way participate in any group with a Third Party with respect to any voting securities of the Company; {B1246652.1} (d) deposit any voting securities of the Company in any voting trust or subject any Company voting securities to any arrangement or agreement with respect to the voting thereof (other than any such voting trust, arrangement or agreement solely among Piton and its Affiliates and otherwise in accordance with this Agreement); (e) effect or ~~seek~~seek to effect, offer or propose ~~(whether publicly or otherwise)~~ to effect, ~~or announce any intention to effect or~~ cause or participate in in, or in any way ~~assist,~~ assist or facilitate ~~or encourage~~ any other ~~Person~~ person to effect or seek, offer or propose ~~(whether publicly or otherwise)~~ to effect or participate in~~: (A) except to the extent otherwise specifically permitted by this Agreement~~, any (i) material acquisition of any ~~Issuer Common Stock (~~assets or ~~Beneficial Ownership thereof)~~ businesses of the Company or any ~~material portion~~ of ~~the assets of Issuer and~~ its ~~Subsidiaries (taken together)~~subsidiaries; (Bii) ~~any~~ tender offer or exchange offer, ~~merger~~ merger, acquisition, share exchange or other business combination involving ~~Issuer~~ any of the voting securities or any of the material assets or businesses of the Company or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination)subsidiaries; or (Ciii) ~~any~~ recapitalization, restructuring, liquidation, dissolution or other ~~extraordinary~~ material transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries~~subsidiaries or any material portion of its or their businesses; (iif) ~~except as provided in Article 3~~enter into any negotiations, ~~make~~ agreements or ~~participate in, directly or indirectly,~~ understandings with any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity~~ Third Party with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privatelyforegoing, or ~~voting against or encouraging others to vote against~~advise, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call assist, encourage or seek to ~~call a meeting of Issuer’s stockholders or initiate~~ persuade any ~~stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect~~ Third Party to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing ~~(except as otherwise expressly provided herein).~~or the voting of any Common Stock; (eg) ~~Unless earlier terminated~~ make any request or ~~made inapplicable pursuant~~ proposal that the Company or the Board amend, modify or waive any provision of this Agreement other than through private communications with the Company that would not reasonably be expected to trigger public disclosure obligations of any party; or (h) take any action challenging the validity or enforceability of this Section ~~1.1(f)~~3 or this Agreement. Nothing in this Section 3 shall be deemed to (i) prohibit Piton from communicating privately with the Company’s directors, officers and their Representatives so long as such private communications would not be reasonably be expected to trigger public disclosure obligations for any party or violate any of the provisions of ~~Section 1.1(d~~Sections 3(a)-(h) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) hereof or (ii) limit the exercise in good faith by the Piton Designee of ~~this Section 1.1(f) has occurred and resulted~~ his fiduciary duties solely in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months his capacity as a director of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsCompany. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Cooperation Agreement (Gulf Island Fabrication Inc)

Standstill. Executive agrees that during the Standstill Period (as hereinafter defined): (a) ~~From and after the date hereof, the Investor~~ Executive will not, and will cause ~~each Investor Affiliate~~ his Affiliates (as hereinafter defined) not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchangehereinafter defined) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of ~~Issuer Common Stock pursuant to a tender~~ common stock or ~~exchange offer so long as such tender~~ common stock equivalents or ~~exchange offer (such tender or exchange offer meeting~~ the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is madeCorporation, in each case, ~~during~~ now or hereafter outstanding (collectively, “Securities”) without the ~~pendency~~ consent of the Corporation, if the effect of such ~~Permitted Offer,~~ acquisition would be to increase the ~~Minimum Condition; and (v) provides for consideration payable in cash,~~ aggregate Beneficial Ownership of Securities of Executive to greater than 4.99% of the total number of shares of Company common stock ~~or other securities of~~ then outstanding (the ~~Investor or a Subsidiary thereof, or a combination thereof~~“Percentage Limitation”); provided, ~~that, such consideration offered has, on a per share~~ that the foregoing limitation shall not apply to Executive’s acquisition of ~~Issuer Common Stock basis, a fair market value (as determined in good faith by~~ common stock pursuant to the ~~Investor’s board of directors) equal to or greater than the closing price~~ exercise of the ~~Issuer Common Stock on Nasdaq on~~ stock options granted to him or the ~~Trading Day immediately prior to the earlier~~ vesting of ~~(x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c)~~ any stock options, SARs, or equity he currently holds. In ~~the event the Investor Affiliates make a Permitted Offer~~addition, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor Executive will not, and will cause ~~each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate~~ his Affiliates not to, in make any ~~manner~~public announcement with respect to, ~~directly~~ or ~~indirectly:~~ submit any proposal for or with respect to (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the ~~extent otherwise specifically permitted by this Agreement, any~~ acquisition of ~~any Issuer Common Stock (or~~ Beneficial Ownership ~~thereof~~of any Securities if the effect of such acquisition would be to cause the Beneficial Ownership of Executive and his Affiliates to exceed the Percentage Limitation. For purposes of this Section, the term “Affiliates” shall have the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “Beneficial Ownership” shall be determined in accordance with Rule 13d-3 under the Exchange Act. (b) ~~or any material portion~~ Without the express prior written approval of the ~~assets~~ Board of ~~Issuer~~ Directors of the Corporation (the “Board”), Executive will not, and ~~its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does~~ will cause his Affiliates not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate into, directly or indirectly, ~~any~~ solicit proxies or initiate, propose or become a “participant” in a “solicitation~~” of “proxies~~” (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) ), in opposition to ~~vote,~~ any matter that has been recommended by a majority of the members of the Board or in favor of any matter that has not been approved by the Board or seek to ~~advise~~ advise, encourage or influence any ~~Person or entity~~ “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, “Person”) with respect to the voting ofof Securities in such manner, or initiate, or induce or attempt to induce any Person to initiate, any ~~Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related~~ shareholder proposal relating to the ~~Investor’s exercise~~ Corporation. (c) Without the express prior written approval of the Board, Executive will not, and will cause his Affiliates not to, join a consortium, partnership, limited partnership, syndicate or ~~enforcement~~ other “group” (within the meaning of ~~rights under~~ Section 13(d)(3) of the ~~Purchase Agreement~~Exchange Act), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, ~~in each case~~for the purpose of acquiring, ~~with respect to the Issuer Common Stock~~holding, voting or disposing of Securities, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and for any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action other purpose which would ~~or would reasonably be expected to force Issuer to make a public announcement regarding any~~ require disclosure under Item 4 of Schedule 13D adopted by the ~~types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest~~ Securities and Exchange Commission under the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~Exchange Act. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (fd) The ~~restrictions set forth in Section 1.1(d) (other than~~ “Standstill Period” shall commence on the ~~provisions~~ Date of ~~Section 1.1(d)(i))~~ Termination and shall ~~not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided~~terminate on July 1, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors2018. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Employment Separation Agreement (Banc of California, Inc.)

Standstill. (a) ~~From and after~~ For a period of 12 months following the ~~date hereof~~Effective Time, the ~~Investor will not~~Stockholders, their Controlled Affiliates and ~~will cause each Investor Affiliate~~ any group of persons, acting with the knowledge and consent of the Stockholders, acquiring, holding, voting or disposing of securities which would be required under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder to file with the Stockholders and their Controlled Affiliates a statement on Section 13D with the SEC as a "person" with the meaning of Section 13(d)(3) of the Exchange Act (such group of persons, the "Stockholder Group") shall not toacquire, ~~directly~~ offer to acquire or ~~indirectly,~~ agree to acquire ~~Beneficial Ownership~~ the legal or beneficial ownership of any additional shares of ~~Issuer~~ Common Stock, and the Company shall not take any action, including ~~for purposes~~ stock repurchases, in either case that would result in the Stockholder Group holding, in the aggregate, legal or beneficial ownership of ~~this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (~~in ~~whole or in part) from such Issuer~~ excess of 90% of the outstanding Common Stock~~, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such~~ . The foregoing restriction ~~on acquisitions~~ will not ~~be applicable with respect~~ apply to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including acquisitions pursuant to a ~~shareholder rights plan or similar plan or agreement, (iii) as a result~~ transaction in which the same price per share is offered for all shares of ~~the exercise (or exchange) of any rights distributed~~ Common Stock not owned by the ~~Issuer pursuant to clause~~ Stockholder Group and such acquisition is (iia) ~~above, (iv) in accordance with a Permitted Offer or (v) which has been~~ approved by a majority of the ~~Non~~Independent Directors (after receipt of a fairness opinion from a nationally recognized investment bank), or (b) if a merger, subject to a vote of the holders of a majority of shares of Common Stock not held by the Stockholder Group, or (c) if a tender offer, (i) subject to a non-~~Investor Directors~~waivable minimum condition that at least a majority of the shares of Common Stock not owned by the Stockholder Group be tendered and (ii) if the tender offer is consummated, an unconditional commitment to acquire the shares of Common Stock not acquired in the tender offer at the same price per share and otherwise for the same consideration paid in the tender offer, as promptly as possible, and in each case within 90 days, which time period may be extended, if necessary, due to review by the SEC, pursuant to a back-end merger. (b) ~~Notwithstanding the provisions~~ For purposes of ~~Section 1.1(a)~~this Agreement, ~~at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ all determinations of the ~~Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner~~ amount of ~~Issuer~~ outstanding Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will shall be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements based on information set forth in ~~this Section 1.1(b)~~the most recent quarterly or annual report, ~~a “Permitted Offer”): (i) is commenced~~ and ~~made in accordance~~ any current report subsequent thereto, filed by the Company with the ~~applicable rules and regulations under~~ SEC, unless the ~~Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3~~ Company shall have updated such information by delivery of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions written notice to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted OfferStockholders. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stockholders Agreement (Salton Inc)

Standstill. (a) ~~From and after~~ At all times prior to the ~~date hereof~~Early Termination Date, ~~the Investor will~~ Apollo shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its Affiliates not to, ~~directly~~ acquire, offer to acquire, or ~~indirectly~~agree to acquire, ~~acquire Beneficial Ownership~~ by purchase or otherwise, any Voting Securities of the Company or any of its Affiliates, other than: (i) the Converted Shares, or an acquisition as a result of a stock split, stock dividend or similar recapitalization, (ii) acquisitions of Voting Securities that together with all Voting Securities owned by Apollo and its Affiliates do not exceed 15% of the Total Voting Power. (iii) stock options or similar rights granted as compensation for performance as a director or officer of the Company or its Subsidiaries (and any shares ~~of Issuer Common Stock, including for purposes of this Section 1.1(a~~issuable upon exercise thereof), (iv) transfers between or among the Apollo Entities, (v) any rights that are granted to all Stockholders (and any shares issuable upon exercise thereof), ~~rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value~~ and (~~in whole or in part~~vi) ~~from such Issuer Common Stock, if, after giving effect to such acquisition,~~ acquisitions of Voting Securities approved by the ~~Investor’s Investor Percentage Interest would exceed the Cap;~~ Company. provided, however, that (A) if Apollo or any of its Affiliates in good faith inadvertently acquires Voting Securities in violation of these provisions and within 30 business days after the first date on which it has actual knowledge (including by way of written notice given by the Company) that a violation has occurred Apollo or any of its Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that Apollo and its Affiliates no longer beneficially own any such ~~restriction on acquisitions will~~ shares or have any agreement or understanding relating to such shares, this Section 5(a) shall be deemed to not have been violated; and (B) no violation of this provision shall be ~~applicable~~ deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (x) investments in investment funds as to which Apollo has no control or power to control with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends voting or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer investment decisions or (vy) ~~which has been approved~~ acquisitions of securities by a ~~majority of the Non-Investor Directors.~~limited partner in Apollo or an Affiliate thereof as to which limited partner Apollo has no control or power to control; (b) ~~Notwithstanding the provisions~~ The obligations of Stockholders under Section ~~1.1(a), at any time following the earlier of (x~~5(a) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, shall terminate on the ~~twentieth~~ first date (~~20th~~the "Early Termination Date") ~~business day~~ on which any of ---------------------- the following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectlyevents occurs: (i) ~~enter into or agree~~At any time after the fifth anniversary of the Closing Date, the Shares represent less than 3% of the fully diluted equity interests in the Company (calculated giving effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the ~~extent otherwise specifically permitted by this Agreement~~exercise of all outstanding options, warrants and other rights to purchase to acquire any ~~acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion~~ Equity Interests of the ~~assets of Issuer and its Subsidiaries (taken together~~Company); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries;. (ii) ~~except as provided~~ If the Company shall, in ~~Article 3~~breach of its obligations under this Agreement, ~~make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act)~~ fail to ~~vote, or seek to advise or influence any Person or entity with respect~~ nominate for election to the ~~voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect~~ Board the designees set forth by Apollo pursuant to ~~matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement~~Section 3(a), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules;. (iii) ~~call or seek to call a meeting~~ The Company shall be in material breach of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of its other obligations under the ~~types of matters set forth in clause (i) above; (v) bring~~ Purchase Agreement or any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of Other Agreement and such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) breach shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred have been cured within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors10 days. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Purchase Agreement (Apollo Investment Fund Iv Lp)

Standstill. ~~(a) From and after the date hereof,~~ The Investor hereby agrees that the Investor ~~will not~~shall neither acquire, ~~and will cause each Investor Affiliate not to~~nor enter into discussions, ~~directly~~ negotiations, arrangements or ~~indirectly~~understandings with any third party to acquire, ~~acquire Beneficial Ownership~~ beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of ~~shares~~ 1934, as amended) of ~~Issuer Common~~ any Voting Stock (as defined below), any securities convertible into or exchangeable for Voting Stock, ~~including for purposes of this Section 1.1(a), rights, options~~ or any other ~~derivative securities or contracts or instruments~~ right to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Voting Stock (~~i) pursuant to the Purchase Agreement (unless~~except, ~~for the avoidance~~ in any case, by way of ~~doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits,~~ stock dividends or other distributions or ~~recapitalizations or similar~~ offerings made ~~generally~~ available ~~by the Issuer or any Subsidiary thereof~~ to holders of ~~Issuer Common~~ any Voting Stock generally) without the written consent of the Company, if the effect of such acquisition would be to increase the Voting Power (as defined below) of all Voting Stock then beneficially owned (as defined above) by the Investor or which it has a right to acquire to more than nineteen and ninety-nine one hundredths percent (19.99%) (the "STANDSTILL PERCENTAGE") of the Total Voting Power (as defined below) of the Company at the time in effect; PROVIDED that: (a) The Investor may acquire Voting Stock without regard to the foregoing limitation, and such limitation shall be suspended, but not terminated, if and for as long as (i) a tender or exchange offer is made and is not withdrawn or terminated by another person or group to purchase or exchange for cash or other ~~equity securities~~ consideration any Voting Stock that, if accepted or if otherwise successful, would result in such person or group beneficially owning or having the right to acquire shares of Voting Stock with aggregate Voting Power of more than nineteen and ninety-nine one hundredths percent (19.99%) of the ~~Issuer~~Total Voting Power of the Company then in effect and such offer is not withdrawn or terminated prior to the Investor making an offer to acquire Voting Stock or acquiring Voting Stock; PROVIDED HOWEVER, that the foregoing standstill limitation will be reinstated once any such tender or exchange offer is withdrawn or terminated, (ii) another person or group hereafter acquires Voting Stock that results in such person or group being required to file a Schedule 13D (under the rules promulgated under Section 13(d) under the Securities and Exchange Act of 1934, as such rules and section are in effect on the date hereof), ~~including rights offerings and distributions made generally to holders of Issuer Common Stock (~~or other ~~equity securities~~ similar or successor schedule or form, indicating that the purpose of such acquisition is other than for mere investment; PROVIDED, HOWEVER, that the foregoing standstill limitation will be reinstated once the percentage of Total Voting Power beneficially owned by such other person or group falls below five percent (5%); (iii) another person or group hereafter acquires Voting Stock that results in such person or group being required to file a Schedule 13G, or other similar or successor schedule or form, indicating that such other person or group beneficially owns or has the right to acquire Voting Stock with aggregate Voting Power of more than nineteen and ninety-nine one hundredths percent (19.99%) of the ~~Issuer~~Total Voting Power of the Company; PROVIDED, HOWEVER, that the foregoing standstill limitation will be reinstated once the percentage of Total Voting Power beneficially owned by such other person or group falls below five percent (5%); or (iv) another person or group orally or in writing contacts the Company and advises the Company of such person's or group's intention to commence a tender or exchange offer that, if so commenced, would result in a suspension pursuant to clause (i) above (e.g., a "bear hug" offer); PROVIDED, HOWEVER, that the foregoing standstill limitation will be reinstated if such intention is withdrawn in writing or other reasonable evidence of such withdrawal is provided to the Investor. The Company shall notify the Investor in writing of the occurrence of any event described in clauses (i) through (iv) of the immediately preceding sentence as soon as practicable following the Company's becoming aware of any such event, and in any case, shall provide the Investor written notice of any such event within twenty-four (24) hours of the occurrence of any such event. (b) The Investor will not be obliged to dispose of any Voting Stock if the aggregate percentage of the Total Voting Power of the Company represented by Voting Stock beneficially owned by the Investor or which the Investor has a right to acquire is increased beyond the Standstill Percentage (i) as a result of ~~their ownership of Issuer Common Stock (or other equity securities~~ a recapitalization of the ~~Issuer~~Company or a repurchase or exchange of securities by the Company or any other action taken by the Company or its affiliates; (ii) ~~including~~ as the result of acquisitions of Voting Stock made during the period when the Investor's "standstill" obligations are suspended pursuant to ~~a shareholder rights plan or similar plan or agreement,~~ Section 10.1(a); (iii) as a result of ~~the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above~~an equity index transaction, provided that Investor shall not vote such shares; (iv) ~~in accordance with a Permitted Offer~~ by way of stock dividends or other distributions or rights or offerings made available to holders of shares of Voting Stock generally; (v) ~~which has been approved by~~ with the consent of a simple majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) authorized members of the ~~Exchange Act~~Company's Board of Directors; or (vi) as part of a ~~tender~~ transaction on behalf of Investor's Defined Benefit Pension Plan, Profit Sharing Retirement Plan, 401(k) Savings Plan, Sheltered Employee Retirement Plan and Sheltered Employee Retirement Plan Plus, or ~~exchange offer which~~any successor or additional retirement plans thereto (collectively, ~~if consummated, would result~~ the "RETIREMENT PLANS") where the Company's shares in such ~~Person becoming~~ Retirement Plans are voted by a trustee for the ~~Beneficial Owner~~ benefit of ~~Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer~~Investor employees or, ~~a “Third Party Offer”)~~for those Retirement Plans where Investor controls voting, ~~unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary~~ where Investor agrees not to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes vote any ~~action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect~~ shares of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in~~ Retirement Plan Voting Stock that would cause Investor to exceed the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted OfferStandstill Percentage. (c) ~~In the event the Investor Affiliates make a Permitted Offer~~As used in this Section 10, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage the term "VOTING STOCK" means the Common Stock and any other ~~Person~~ securities issued by the Company having the ordinary power to ~~effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to~~ vote in the ~~extent otherwise specifically permitted by this Agreement, any acquisition~~ election of ~~any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion~~ directors of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer Company (other than ~~with respect to matters related to~~ securities having such power only upon the ~~Investor’s exercise or enforcement~~ happening of ~~rights under the Purchase Agreement~~a contingency that has not occurred), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect~~ term "VOTING POWER" of any Voting Stock means the number of votes such Voting Stock is entitled to ~~a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ cast for directors of the ~~Issuer Board;~~ Company at any meeting of shareholders of the Company, and (iii) ~~subject~~ the term "TOTAL VOTING POWER" means the total number of votes which may be cast in the election of directors of the Company at any meeting of shareholders of the Company if all Voting Stock was represented and voted to the ~~obligations~~ fullest extent possible at such meeting other than votes that may be cast only upon the happening of a contingency that has not occurred. For purposes of this Section 10, the Investor shall not be deemed to have beneficial ownership of any Voting Stock held by a pension plan or other employee benefit program of the Investor ~~under Section 3.2, in the event that the Persons designated by~~ if the Investor does not have the power to ~~be elected or appointed to~~ control the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution investment decisions of such ~~agreement, the Issuer has given Investor written notice of its intention to enter into such agreement~~plan or program. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Securities Purchase and Investor Rights Agreement (Panja Inc)

Standstill. ~~(a) From and after the date hereof~~You agree that, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following until the earlier of (xi) ~~ten~~ the Standstill Period (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”as hereinafter defined), ~~unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay,~~ or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) ~~is made~~ the execution of a final definitive agreement with respect to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased Possible Transaction by the ~~Investor Affiliates~~Company and you or your affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically ~~approved~~ invited in writing by ~~Issuer~~the Board of Directors of the Company, ~~the Investor will not, and will cause each Investor Affiliate and its and their respective~~ neither you nor any of your Representatives acting on your behalf or on behalf of ~~Investor or any Investor Affiliate not to,~~ other persons acting in concert with you will in any manner, directly or indirectly~~: (i) enter into or agree~~, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in: a) any voluntary acquisition of (i) any securities (or beneficial ownership thereof), or rights or options to acquire any securities (or beneficial ownership thereof) of the Company in ~~or in~~ excess of any ~~way assist~~such securities beneficially owned by you as of the date of this letter agreement, ~~facilitate or encourage any~~ other ~~Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in:~~ than (A) ~~except~~ the acquisition by you of shares of Class B Common Stock, par value $0.01 per share, of the Company (“Class B Common Stock”) pursuant to your exercise of (1) any outstanding warrant held by you as of the date of this letter agreement or (2) your preemptive rights to acquire Class B Common Stock under Company’s Amended and Restated Certificate of Incorporation, (B) the conversion of any Class B Common Stock held by you into Class A Common Stock, par value $0.01 per share, of the Company (“Class A Common Stock”), (C) the acquisition by you of any equity awards that may granted or issued to you by the Company on or after the date hereof, and (D) the acquisition by you of shares of Class A Common Stock pursuant to the ~~extent otherwise specifically permitted by this Agreement, any acquisition~~ exercise of any ~~Issuer Common Stock~~ equity awards held by you, or (~~or Beneficial Ownership thereof~~ii) or any material ~~portion of~~ assets, indebtedness or businesses of, the ~~assets of Issuer and its Subsidiaries (taken together); (B~~Company; b) any tender or exchange offer, merger or other business combination involving ~~Issuer~~ the Company or any material assets of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the ~~Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~Company; c) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries~~affiliates; ~~(ii~~d) ~~except as provided in Article 3, make or participate in, directly or indirectly,~~ any “solicitation” of “proxies” (as such terms are ~~defined under Regulation 14A under~~ used in the proxy rules of the Securities and Exchange ~~Act~~Commission) or consents to ~~vote, or seek to advise or influence~~ vote any ~~Person or entity with respect to~~ voting securities of the ~~voting of, any Issuer Common Stock~~ Company or any ~~demand for a copy~~ of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement)its affiliates, except ~~that this subsection does not restrict (A) the Investor Directors from participating~~ in your capacity solely as ~~members~~ an officer or director of the ~~Issuer Board and any committees thereof in their capacity as such or (B)~~ Company on behalf of the ~~Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x~~Company; e) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholdersaction, ~~form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act~~ whether alone or in concert with others, to seek or obtain additional representation on the Board of Directors or, to seek to advise or influence ~~or control Issuer’s management,~~ any person with respect to the ~~Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members~~ voting of any voting securities of the ~~Issuer Board and any committees thereof in their capacity as such and (y~~Company; or f) ~~the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take~~ any action which would or would reasonably be expected to force ~~Issuer~~ you, your Representatives or the Company to make a public announcement regarding any of the types of matters set forth in ~~clause (i) above; (v) bring any action, or otherwise act, to contest~~ the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~foregoing. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Confidentiality Agreement (Lyon William H)

Standstill. (a) ~~From~~ Each Purchaser covenants to and ~~after~~ agrees with the ~~date hereof~~Company that, without the ~~Investor will not~~Company’s prior written consent, ~~and will cause each Investor Affiliate not to~~neither such Purchaser nor any of its Affiliates will, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership indirectly until the date that ~~derive their value~~ is ninety (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (1090) days ~~following~~ after the ~~date any Third Party commences~~ Closing Date (~~within~~ the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted OfferStandstill Period”): (i) ~~is commenced and made~~ in ~~accordance with the applicable rules and regulations under the Exchange Act applicable~~ any way acquire, offer or propose to ~~tender~~ acquire or ~~exchange offers, including, if applicable, Section 13(e)-3~~ agree to acquire legal title to or Beneficial Ownership of ~~the Exchange Act and the related rules and regulations applicable thereto~~any Company Securities; (ii) is make any public announcement with respect to, or submit to the Company or any of its directors, officers, representatives, trustees, employees, attorneys, advisors, agents or Affiliates, any proposal for the acquisition of any Company Securities or with respect to any merger, consolidation, business combination, restructuring, recapitalization or purchase of any substantial portion of the assets of the Company of any of its Subsidiaries, in which such Purchaser and its Affiliates are involved, and whether or not such proposal might require the making of a public announcement by the Company unless the Company shall have made a prior written request to ~~all holders of Issuer Common Stock~~such Purchaser to submit such a proposal; (iii) ~~will expire no earlier than midnight~~seek or propose to influence, ~~New York City time~~advise, on change or control the ~~twentieth (20th) business day following~~ management, the ~~commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation~~ board of directors of the ~~Investor Affiliates to purchase Issuer Common Stock; provided~~Company, ~~that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced~~ governing instruments or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority policies or affairs of the ~~outstanding shares~~ Company by way of ~~Issuer Common Stock outstanding at~~ any public communication or communication with any Person other than the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereofCompany, or ~~a combination thereof; provided~~make, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way ~~assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or~~ participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined ~~under~~ or used in Regulation 14A under the Exchange Act) to ~~vote,~~ vote any Company Securities or ~~seek to advise or influence~~ become a “participant” in any ~~Person or entity~~ “election contest” as such terms are defined and used in Rule 14a-11 under the Exchange Act) with respect to ~~the voting of~~Company Securities; provided, ~~any Issuer Common Stock~~ however, that nothing in this clause (iii) shall prevent such Purchaser or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor its Affiliates from ~~opposing publicly or privately, or voting against or encouraging others to vote against,~~ (x) voting in any ~~proposal of a third party regarding a merger~~ manner any Company Securities over which such Purchaser or ~~other business combination involving the Issuer or any Subsidiary thereof~~ such Affiliates has Beneficial Ownership or (y) ~~other similar corporate transaction on which a vote~~ communicating privately with shareholders of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect Company to the ~~Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection~~ extent such communication does not ~~restrict (x) the Investor Directors from participating as members~~ constitute a “solicitation” of ~~the Issuer Board and any committees thereof in their capacity~~ “proxies,” as such terms are defined or used in Regulation 14A under the Exchange Act and the number of persons with whom such Purchaser communicates is fewer than ten (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d10); or (viiv) ~~enter into~~ make a request to amend or waive any ~~discussions or arrangements with any third party~~ provision of this Section 5.5(a). Notwithstanding the above provisions under this Section 5.5(a), with respect to each case under items (i) — (iii) above, if at any time the Company issues any Company Securities (except for any Company Securities issued or granted pursuant to the employee share incentive plan of the ~~foregoing~~ Company existing as of the date hereof (~~except~~ but such exception shall not apply to any future amendments which may be made to such plan)) or sells any treasury ADSs, each Purchaser shall have the right to acquire such number of Company Securities in order to maintain the same percentage ownership it owns in the Company prior to such issuance or sale of such Company Securities or treasury ADSs (as ~~otherwise expressly provided herein~~applicable) (on a fully diluted and as converted basis as defined in the Exhibit C). (eb) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) purposes of this ~~Section 1.1(f) has occurred and resulted~~ Agreement, a Person shall be deemed to have “Beneficial Ownership” of any securities in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group respect of which such ~~third party~~ Person or any such Person’s Affiliates is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor considered to be ~~elected or appointed to~~ a “Beneficial Owner” under Rule 13d-3 under the ~~Issuer Board~~ Exchange Act as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect ~~or (y)~~ on the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsdate hereof. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Subscription Agreement (JD.com, Inc.)

Standstill. ~~(a) From and after~~ During the period commencing on the date ~~hereof~~this Agreement becomes effective in accordance with Section 9M and ending at the time the Xxxx Investors and their Affiliates no longer beneficially own any of the voting securities of the Company, ~~the~~ each Xxxx Investor ~~will~~ shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its Affiliates and Representatives, to the extent such Representatives are acting on behalf of such Xxxx Investor, not to, ~~directly or indirectly, acquire Beneficial Ownership~~ take any of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest would exceed the Cap~~following actions; provided, ~~however~~that nothing in this Section 5 shall (x) limit any action required to be taken by an Appointed Director in his or her capacity as a director of the Company to the extent such Appointed Director reasonably believes he or she is required to take such action in order to comply with his or her fiduciary duties in his or her capacity as a director of the Company, ~~that~~ (y) prohibit any Xxxx Investor from voting in any manner (except as otherwise required in order to comply with this Section 5) on matters put to stockholders of the Company for their approval, or (z) limit any Xxxx Investor’s ability to make confidential suggestions, recommendations or proposals to the Company, the Board or any of the directors of the Company so long as such ~~restriction on acquisitions will~~ suggestions, recommendations or proposals would not be ~~applicable with respect~~ reasonably be expected to require the ~~acquisition by~~ Company to make public disclosure thereof (and if such suggestions, recommendations or proposals would require the ~~Investor Affiliates of Beneficial Ownership of Issuer Common Stock~~ Company to make public disclosure such suggestions, recommendations and proposals will be deemed to be immediately and automatically withdrawn and not to have been made): (i) ~~pursuant~~ acquire or agree to ~~the Purchase Agreement~~ acquire (~~unless, for the avoidance~~ except by way of ~~doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits,~~ stock dividends or other distributions or ~~recapitalizations or similar~~ offerings made ~~generally~~ available ~~by the Issuer or any Subsidiary thereof~~ to holders of ~~Issuer Common Stock (or other equity~~ voting securities of the ~~Issuer~~Company generally on a pro rata basis, provided that any such securities so received shall be subject to the provisions hereof), ~~including rights offerings and distributions made generally to holders~~ directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of ~~Issuer Common Stock~~ control of another Person (or other ~~equity~~ than an aggregate amount of outstanding voting securities of the ~~Issuer) as~~ Company acquired by a ~~result~~ Xxxx Investor or any of ~~their ownership~~ its controlled Affiliates in its ordinary course of ~~Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii)~~ business as a result of the ~~exercise~~ acquisition of any portfolio company or other investment entity that owns such securities at the time of such acquisition if such additional securities represent in the aggregate less than two percent (~~or exchange~~2%) of ~~any rights distributed~~ the then outstanding voting securities of the Company or such acquisition is expressly approved in written resolutions duly adopted by the ~~Issuer pursuant to clause (ii) above~~Board, ~~(iv) in accordance with~~ by joining a ~~Permitted Offer~~ partnership, limited partnership, syndicate or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences other “group” (within the meaning of Section ~~14(d~~13(d)(3) of the Securities Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), ~~unless during such ten (10) day period~~or otherwise, beneficial ownership of any voting securities of the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) Company (including ~~granting an exception in respect of such Third Party Offer under~~ any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 voting securities of the ~~Exchange Act and the related rules and regulations applicable thereto~~Company beneficially owned by any WCP Investor); (ii) engage, or in any way participate, in any “solicitation” (as such term is defined in Rule 14a-1(l) under the Securities Exchange Act) of proxies or consents (whether or not relating to the election or removal of directors); seek to advise, encourage or influence any Person with respect to the voting of any voting securities of the Company; initiate, propose or make any stockholder proposals, whether made pursuant to ~~all holders~~ Rule 14a-8 or Rule 14a-4 under the Securities Exchange Act or otherwise; induce or attempt to induce any other Person to initiate any such stockholder proposal; or otherwise communicate to any Person (other than the Company, the Board or any of ~~Issuer Common Stock~~the directors of the Company) how it intends to vote the voting securities of the Company beneficially owned by such Xxxx Investor on any matter put to or proposed to be put to the stockholders of the Company for their approval (whether at an annual or special meeting of stockholders of the Company, by written consent or otherwise) or otherwise seek to remove any director of the Company; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, ~~effect~~ offer, propose or ~~seek, offer or propose~~ seek (whether publicly or otherwise) to ~~effect~~enter into, or ~~announce any intention to effect or cause or participate~~ otherwise be involved in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreementpart of, any ~~acquisition~~ merger, consolidation, business combination, tender or exchange offer, sale or purchase of ~~any Issuer Common Stock (or Beneficial Ownership thereof) or any material~~ a substantial portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer Company or any of its Subsidiaries~~; (ii) except as provided in Article 3~~, ~~make~~ sale or ~~participate in, directly~~ purchase of securities or ~~indirectly, any “solicitation”~~ debt of ~~“proxies” (as such terms are defined under Regulation 14A under~~ or similar transactions involving the ~~Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock~~ Company or any ~~demand for a copy~~ of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its ~~rights under Section 1.1(d)(ii)(B);~~Subsidiaries; or (iv) ~~take~~ publicly disclose any ~~action which would~~ intention, plan, arrangement or ~~would reasonably be expected to force Issuer to make a public announcement regarding~~ understanding inconsistent with any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)foregoing. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stockholders Agreement (Acadia Healthcare Company, Inc.)

Standstill. (a) ~~From~~ The Investor and ~~after~~ its controlled Affiliates agree that following the Closing until the later of (1) the first anniversary of the Closing and (2) the date ~~hereof~~that the Investor ceases to Beneficially Own three percent (3%) or more of the issued and outstanding Voting Securities, the Investor ~~will~~ shall not, and ~~will~~ shall cause ~~each Investor~~ its controlled Affiliates and, if acting at the direction or on the behalf of any Holder or controlled Affiliate ~~not to~~of any Holder, the Representatives of the Holders and their controlled Affiliates to not, directly or indirectly, alone or in concert with any other Person, without the prior written consent of the Board or as expressly permitted herein: (i) acquire, solicit, propose, seek or offer or agree to acquire any Beneficial Ownership of ~~shares of Issuer Common Stock~~any Voting Securities, including ~~for purposes of this Section 1.1(a),~~ any rights, warrants or options to acquire, or securities convertible into or exchangeable for, such Voting Securities, that would result in the Investor Beneficially Owning fifteen percent (15%) or more of the issued and outstanding Voting Securities; (ii) publicly propose or publicly offer or participate in any effort to acquire the Company or any of its Subsidiaries or any material assets or operations of the Company or any of its Subsidiaries, or propose, offer or participate in any Change of Control transaction involving the Company or any of its Subsidiaries, or any recapitalization, restructuring, liquidation, disposition, dissolution or other ~~derivative securities~~ Extraordinary Transaction involving the Company, any of its Subsidiaries or ~~contracts or instruments to acquire such ownership that derive~~ any material portion of their ~~value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~respective businesses; provided, however, that this clause shall not preclude the tender by any Holder into any third party tender offer or third party exchange offer or the vote by such ~~restriction on acquisitions will~~ Holder of any Voting Securities with respect to any Extraordinary Transaction in accordance with Section 3, provided that such Holder is not ~~be applicable~~ otherwise in violation of this clause (ii); (iii) knowingly encourage any third party to propose, or offer to acquire Beneficial Ownership of fifteen percent (15%) or more of the issued and outstanding Voting Securities (other than the sale of the Voting Securities Beneficially Owned by the Investor as and to the extent permitted in accordance herewith); (iv) seek to call, request the call of or call a special meeting of the shareholders of the Company, or make or seek to make a shareholder proposal (whether pursuant to Rule 14a-8 under the Exchange Act or otherwise) at any meeting of the shareholders of the Company or in connection with any action by consent in lieu of a meeting, or make a request for a list of the Company’s shareholders, or seek election to the Board or seek to add, replace or remove a director of the Company; (v) solicit proxies, designations or written consents of shareholders, or conduct any binding or nonbinding referendum with respect to Voting Securities, or make or in any way participate in any “solicitation” of any “proxy” within the meaning of Rule 14a-1 promulgated by the SEC under the Exchange Act (but without regard to the exclusion set forth in Rule 14a-1(l)(2)(iv) from the definition of “solicitation”) to vote any Voting Securities with respect to any matter, or become a participant in any contested solicitation for the election of directors with respect to the ~~acquisition by~~ Company (as such terms are defined or used in the ~~Investor Affiliates~~ Exchange Act), other than solicitations or acting as a participant in support of ~~Beneficial Ownership~~ the voting obligations of ~~Issuer Common Stock (i)~~ such Holders pursuant to Section 3, if applicable; (vi) seek or propose to influence, change or control the ~~Purchase Agreement (unless, for~~ management or the ~~avoidance of doubt,~~ Board or the ~~representation~~ governance or policies of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~Company, ~~(ii) as~~ including by means of a ~~result~~ solicitation of proxies or seeking to influence or direct the vote of any ~~stock splits~~holder of Voting Securities; (vii) make or issue or cause to be made or issued any public disclosure, ~~stock dividends~~ announcement or ~~other distributions~~ statement (including the filing of any document or ~~recapitalizations or similar offerings made generally available by~~ report with the ~~Issuer~~ SEC or any ~~Subsidiary thereof~~ other governmental agency or any disclosure to ~~holders of Issuer Common Stock (or other equity securities~~ any journalist, member of the ~~Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock~~ media or securities analyst) (~~or other equity securities of the Issuer~~A) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of concerning any ~~rights distributed by the Issuer pursuant to~~ potential matter described in clause (ii) above, (B) in support of any matter described in clause (iv) above, or (C) in ~~accordance with a Permitted Offer or~~ support of any solicitation described in clause (v) ~~which has been approved by a majority~~ or (vi) above (other than solicitations on behalf of the ~~Non-Investor Directors~~Board); (viii) deposit any Voting Securities in a voting trust or similar arrangement, or subject any Voting Securities to any voting agreement or pooling arrangement, or grant any proxy, designation or consent with respect to any Voting Securities (other than to a designated representative of the Company pursuant to a proxy or consent solicitation on behalf of the Board); (ix) publicly disclose (including the filing of any document or report with any governmental agency or any disclosure to any journalist, member of the media or securities analyst) any intent, purpose, plan or proposal to obtain any waiver, consent under, or amendment of, any of the provisions of this Section 2 or Section 3, or otherwise bring any action or otherwise act to contest the validity or enforceability of this Section 2 or Section 3 or seek a release from the restrictions or obligations contained in this Section 2 or Section 3; provided, that neither a Holder nor any of its Affiliates shall be restricted from contesting the applicability of this Section 2 to such Holder or any of its Affiliates under any particular circumstance privately with the Company or in response or relation to any Action brought against them by the Company or its Affiliates; or (x) publicly announce an intention to do, or enter into any discussions, negotiations, agreement, arrangement or understanding with others to do, any actions in connection with the foregoing, or advise, assist, encourage, support, provide financing to or seek to persuade others to take any action, or act in concert with others or as part of a Group, with respect to any of the foregoing. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offerforegoing, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan Holder and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will its Representatives shall be entitled to ~~commence~~ make private proposals or have confidential discussions with the Chief Executive Officer of the Company and ~~accept for purchase and purchase shares~~ the chairperson of ~~Issuer Common Stock pursuant to a tender~~ the Board, or ~~exchange offer so long as such tender~~ the full Board (or ~~exchange offer (such tender or exchange offer meeting~~ any committee thereof), regarding any of the ~~requirements~~ matters set forth in this Section ~~1.1(b)~~2(a) as long as that such proposal or discussion is not publicly disclosed, ~~a “Permitted Offer”):~~and does not require public disclosure under applicable Laws, by the Company or any of its Affiliates, such Holder or any other Person; provided, that subject to Section 3, nothing in this Section 2 shall prevent such Holder and its Affiliates from voting any Voting Securities in any manner. (c) Section 2(a) shall immediately terminate and be of no further force and effect in the event that the applicable Holder and its controlled Affiliates are not then in breach of this Section 2: (i) ~~is commenced and made in accordance~~ the Company enters into a definitive agreement with ~~the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3~~ an unaffiliated third party involving a Change of ~~the Exchange Act and the related rules and regulations applicable thereto~~Control; (ii) a bona fide tender offer or exchange offer with respect to the Equity Securities is ~~made~~ commenced which, if successful, would result in a Change of Control to ~~all holders~~ an unaffiliated third party, and the Board either has recommended in favor of ~~Issuer Common Stock;~~such transaction or has failed to recommend against such transaction within ten (10) Business Days after the commencement thereof; or (iii) ~~will expire no earlier than midnight, New York City time, on~~ the ~~twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is~~ Company becomes subject to ~~customary conditions~~ any voluntary or involuntary reorganization or restructuring process under Laws relating to bankruptcy, insolvency or protection of creditors generally. If Section 2(a) shall have terminated as the ~~obligation~~ result of either the ~~Investor Affiliates~~ foregoing clause (i) or clause (ii), Section 2(a) shall be reinstated and shall apply in full force according to ~~purchase Issuer Common Stock; provided, that, (A)~~ its terms in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the ~~number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority~~ applicable definitive agreement or tender offer or exchange offer is terminated without consummation of the ~~outstanding shares~~ applicable Change of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted OfferControl occurring. (d) ~~Except as provided in or~~ Section 2 shall apply to a Holder that is an permitted ~~by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer,~~ assignee of the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to ~~such tender or exchange offer, merger or other business combination); or (C~~Section 15(o) ~~any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided~~ in ~~Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under~~ the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related same manner it applies to the Investor~~’s exercise or enforcement of rights under the Purchase Agreement), except~~ ; provided that ~~this subsection does not restrict (A)~~ the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related transfers to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for Holder its Equity Securities constituting at least ~~thirty-five~~ nine percent (359%) of the ~~Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (~~then-issued and ~~not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result~~ outstanding Voting Securities in connection with such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsassignment. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Shareholder Agreement (Riot Blockchain, Inc.)

Standstill. ~~(a) From~~ Subject to Section 3.2, from and after the ~~date hereof~~Closing Date until the termination of this Agreement, ~~the Investor will not, and will cause each Investor Affiliate not to,~~ neither Advance nor its Permitted Transferees shall directly or ~~indirectly~~indirectly acquire, ~~acquire Beneficial Ownership~~ in the aggregate (calculated on each date of purchase of the then-outstanding Equity Securities based on the number of shares ~~of Issuer Common Stock~~reported as outstanding in the most recent filing made by the Company with the SEC pursuant to the Exchange Act or the Securities Act, ~~including for purposes of this Section 1.1(a~~as applicable, containing such information), ~~rights~~beneficial ownership of Equity Securities of the Company in excess of the percentage of the Equity Securities of the Company beneficially owned by Advance and such Permitted Transferees as of the closing of the IPO, ~~options or other derivative securities or contracts or instruments to acquire such ownership that derive their value~~ as set forth in the final prospectus related thereto (~~in whole or in part) from such Issuer Common Stock, if,~~ after giving effect to any exercise of the underwriters’ over-allotment option) plus five (5) percentage points (such ~~acquisition~~percentage, the ~~Investor’s Investor Percentage Interest~~ “Advance Ownership Cap”). By way of example only, if as of the closing of the IPO, Advance and such Permitted Transferees beneficially own twenty-five percent (25%) of the aggregate amount of the then-outstanding Equity Securities of the Company as specified above, the Advance Ownership Cap would ~~exceed~~ be thirty percent (30%). The foregoing shall not prohibit any of the ~~Cap; provided~~following acquisitions, ~~however, that~~ and any such ~~restriction on~~ acquisitions ~~will~~ shall not be ~~applicable with respect to the acquisition by the Investor Affiliates~~ counted towards determining if Advance or any of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ such Permitted Transferees has acquired Equity Securities of the ~~Investor~~ Company in ~~Section 4.2(d~~excess of the Advance Ownership Cap: (a) ~~hereof is not true and correct), (ii) as a result~~ Advance or any of ~~any~~ such Permitted Transferees from acquiring Equity Securities of the Company by way of stock splits, stock ~~dividends~~ dividends, reclassifications, recapitalizations, or other distributions ~~or recapitalizations or similar offerings made generally available~~ by the ~~Issuer~~ Company to all holders of Equity Securities of the Company on a pro rata basis; (b) acquisitions by Advance or any ~~Subsidiary thereof to holders~~ of ~~Issuer Common Stock (or other equity securities~~ such Permitted Transferees of Equity Securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) Company approved in ~~accordance with a Permitted Offer or (v) which has been approved~~ advance by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) independent directors of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common StockBoard; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer.or (c) In acquisitions of any Equity Securities of the ~~event~~ Company by Xxxxxxx, whether through the ~~Investor Affiliates make a Permitted Offer~~issuance by the Company, the ~~Issuer will furnish~~ exercise or conversion of Equity Securities of the ~~Investor Affiliates with all information concerning the Issuer required~~ Company by ~~the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b)~~Xxxxxxx, (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Governance Agreement (Reddit, Inc.)

Standstill. During the Standstill Term, neither the Seller nor any of its Affiliates other than the Excluded Parties (collectively, the “Standstill Parties”) shall (and the Seller shall cause its Standstill Parties not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates Shares of ~~Beneficial Ownership of Issuer~~ Then Outstanding Common Stock and/or Common Stock Equivalents other than the Share Consideration; (b) directly or indirectly, (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company, or (ii) ~~as a result~~ propose or nominate for election to the Company’s Board of Directors any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~Company’s Board of Directors or cause to be voted in favor of such person for election to the Company’s Board of Directors any Shares of Then Outstanding Common Stock; (bc) ~~Notwithstanding~~ directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group the ~~provisions~~ consummation of ~~Section 1.1(a~~which would result in a Change of Control (an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the ~~Investor Affiliates, constitute no less than~~ Company wherein a majority of the ~~outstanding shares~~ Company’s Board of ~~Issuer Common Stock outstanding at~~ Directors recommend that stockholders accept any such Acquisition Proposal, the ~~time of commencement that are~~ Standstill Parties shall not ~~Beneficially Owned by the Investor Affiliates as~~ be prohibited from taking any of the ~~date~~ actions otherwise prohibited by this Section 3.1(c) in connection with such ~~Permitted Offer is commenced, disregarding~~ Acquisition Proposal for ~~purposes~~ so long as the Company’s Board of ~~calculating the number of outstanding shares of Issuer Common Stock any~~ Directors maintains and does not withdraw such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer.recommendation; (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; (f) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~Issuer Common Stock~~ recapitalization, restructuring, liquidation or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (f) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (iih) ~~the Issuer solicits from one~~ enter into discussions, negotiations, arrangements or ~~more Persons, or enters into substantive discussions~~ agreements with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject any Person relating to the ~~obligations of the Investor under Section 3.2,~~ foregoing actions referred to in ~~the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either~~ (xa) ~~not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or~~ through (yg) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredabove; or (~~vii~~i) request or propose to the ~~Issuer~~ Company’s Board of Directors, any member(s) thereof or any ~~material Subsidiary shall~~ officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause (i)); provided, however, that (A) ~~voluntarily commence any proceeding or file any petition seeking liquidation~~nothing contained in this Section 3.1 shall prohibit the Standstill Parties from making confidential, ~~reorganization or other relief under any federal~~non-public proposals to the Company for a transaction of the type described in the foregoing clause (f) that would result in a Change of Control, ~~state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect,~~ and (B) ~~consent to~~ the ~~institution of, or fail to contest~~ mere voting in accordance with Section 4.1 hereof of any voting securities of the Company held by the Standstill Parties shall not constitute a ~~timely and appropriate manner,~~ violation of any ~~proceeding or petition described in clause~~ of clauses (Aa) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. through (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investorabove.

Appears in 1 contract

Samples: Investor Rights Agreement (WisdomTree Investments, Inc.)

Standstill. ~~(a) From and after~~ During the ~~date hereof~~Commitment Period, without the ~~Investor will~~ prior written consent of the Board, each member of the Stockholder Group shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its Affiliates and Associates under its control not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) ~~enter into~~ acquire or ~~agree~~acquire rights to acquire (except by way of stock dividends or other distributions or offerings made available to holders of voting securities of the Company generally on a pro rata basis), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any voting securities of the Company or any voting rights decoupled from the underlying voting securities which would result in the ownership, control or other beneficial ownership interest in more than (A) for Group 42 and its Affiliates and Associates under its control 6.5% of the then-outstanding shares of the Common Stock in the aggregate, provided, however, that this shall exclude any grants of equity securities received by Xxxxxxx Xxxxx in his capacity as director of the Company or shares Xx. Xxxxx is otherwise required by the Company to acquire or hold, and (B) for the BLR Group and its Affiliates and Associates under its control, 8.5% of the then-outstanding shares of the Common Stock in the aggregate; provided, however, that the foregoing ownership limitations shall be determined independently with respect to Group 42 and its Affiliates and Associates under its control, on the one hand, and the BLR Group and its Affiliates and Associates under its control, on the other hand; provided further, that the calculation of such ownership limitations shall exclude any stock buyback transaction by the Company that treats stockholders pro rata; or (ii) knowingly sell all or substantially all, through swap or hedging transactions or otherwise, the voting securities of the Company or any voting rights decoupled from the underlying voting securities held by the Stockholder Group and its Representatives to any Third Party which would, to the actual knowledge of the Stockholder Group, result in such Third Party, together with its Affiliates and Associates, having beneficial ownership interest of 5.0% or more of the then-outstanding shares of Common Stock (except for Schedule 13G filers that are mutual funds, pension funds or index funds); (b) (i) nominate or recommend for nomination a person for election at any Stockholder Meeting at which directors of the Board are to be elected or any solicitation of written consents of stockholders of the Company; (ii) initiate, encourage or participate in any solicitation of proxies or consents in respect of any election contest or removal contest with respect to the Company’s directors; (iii) submit any stockholder proposal for consideration at, or bring any other business before, any Stockholder Meeting; (iv) initiate, encourage or participate in any solicitation of proxies or consents in respect of any stockholder proposal for consideration at, or bring any other business before, any Stockholder Meeting; (v) initiate, encourage or participate in any solicitation of written consents of stockholders; or (vi) initiate, encourage or participate in any “withhold” or similar campaign with respect to any Stockholder Meeting or any solicitation of written consents of stockholders; provided, however, that nothing in this Section 5 shall restrict the Stockholder Group from identifying and designating any of the Designees; (c) form, join or in any way participate in any group with respect to any voting securities of the Company in connection with any election or removal contest with respect to the Company’s directors (other than with other members of the Stockholder Group or one or more of their Affiliates to the extent that any such person signs a joinder to this Agreement reasonably agreeable to the Company); (d) deposit any Company voting securities in any voting trust or subject any Company voting securities to any arrangement or agreement with respect to the voting thereof; (e) seek, alone or in concert with others, to amend any provision of the Company’s certificate of incorporation or bylaws; provided, however, that nothing herein shall be deemed to restrict the ability of each Designee to propose any changes he deems appropriate in accordance with his fiduciary duties as a director of the Company; (f) effect or ~~seek~~seek to effect, offer or propose ~~(whether publicly or otherwise)~~ to effect, ~~or announce any intention to effect or~~ cause or participate in in, or in any way ~~assist,~~ assist or facilitate ~~or encourage~~ any other ~~Person~~ person to effect or seek, offer or propose ~~(whether publicly or otherwise)~~ to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) in any tender offer or exchange offer, ~~merger~~ merger, acquisition, share exchange or other business combination ~~involving Issuer~~ with the Company or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination)subsidiaries; or ~~(C)~~ any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries~~subsidiaries or any material portion of its or their businesses; (iig) ~~except as provided in Article 3~~enter into any discussions, ~~make~~ negotiations, agreements or ~~participate in, directly or indirectly,~~ understandings with any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity~~ Third Party with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privatelyforegoing, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call encourage or seek to ~~call a meeting of Issuer’s stockholders or initiate~~ persuade any ~~stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect~~ Third Party to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the ~~foregoing (except as~~ foregoing, or otherwise ~~expressly provided herein). (e) Unless earlier terminated~~ take or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, cause any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if action materially inconsistent with any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredforegoing; or (~~vii~~h) take any action challenging the ~~Issuer~~ validity or ~~any material Subsidiary shall (A) voluntarily commence any proceeding~~ enforceability of this Section 5 or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution ofthis Agreement, or ~~fail~~ publicly make or in any way advance publicly any request or proposal that the Company or Board amend, modify or waive any provision of this Agreement. Nothing in this Section 5 shall be deemed to ~~contest~~ limit the ability of the Designees to exercise their fiduciary duties under law solely in their capacity as directors of the Company and in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsmanner consistent with their obligations under this Agreement. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Group 42, Inc.)

Standstill. (a) ~~From~~ Each Purchaser covenants to and ~~after~~ agrees with the ~~date hereof~~Company that, without the ~~Investor will not~~Company’s prior written consent, ~~and will cause each Investor Affiliate not to~~neither such Purchaser nor any of its Affiliates will, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership indirectly until the date that ~~derive their value~~ is ninety (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (1090) days ~~following~~ after the ~~date any Third Party commences~~ Closing Date (~~within~~ the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted OfferStandstill Period”): (i) ~~is commenced and made~~ in ~~accordance with the applicable rules and regulations under the Exchange Act applicable~~ any way acquire, offer or propose to ~~tender~~ acquire or ~~exchange offers, including, if applicable, Section 13(e)-3~~ agree to acquire legal title to or Beneficial Ownership of ~~the Exchange Act and the related rules and regulations applicable thereto~~any Company Securities; (ii) is make any public announcement with respect to, or submit to the Company or any of its directors, officers, representatives, trustees, employees, attorneys, advisors, agents or Affiliates, any proposal for the acquisition of any Company Securities or with respect to any merger, consolidation, business combination, restructuring, recapitalization or purchase of any substantial portion of the assets of the Company of any of its Subsidiaries, in which such Purchaser and its Affiliates are involved, and whether or not such proposal might require the making of a public announcement by the Company unless the Company shall have made a prior written request to ~~all holders of Issuer Common Stock~~such Purchaser to submit such a proposal; (iii) ~~will expire no earlier than midnight~~seek or propose to influence, ~~New York City time~~advise, on change or control the ~~twentieth (20th) business day following~~ management, the ~~commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation~~ board of directors of the ~~Investor Affiliates to purchase Issuer Common Stock; provided~~Company, ~~that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced~~ governing instruments or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority policies or affairs of the ~~outstanding shares~~ Company by way of ~~Issuer Common Stock outstanding at~~ any public communication or communication with any Person other than the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereofCompany, or ~~a combination thereof; provided~~make, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way ~~assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or~~ participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined ~~under~~ or used in Regulation 14A under the Exchange Act) to ~~vote,~~ vote any Company Securities or ~~seek to advise or influence~~ become a “participant” in any ~~Person or entity~~ “election contest” as such terms are defined and used in Rule 14a‑11 under the Exchange Act) with respect to ~~the voting of~~Company Securities; provided, ~~any Issuer Common Stock~~ however, that nothing in this clause (iii) shall prevent such Purchaser or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor its Affiliates from ~~opposing publicly or privately, or voting against or encouraging others to vote against,~~ (x) voting in any ~~proposal of a third party regarding a merger~~ manner any Company Securities over which such Purchaser or ~~other business combination involving the Issuer or any Subsidiary thereof~~ such Affiliates has Beneficial Ownership or (y) ~~other similar corporate transaction on which a vote~~ communicating privately with shareholders of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect Company to the ~~Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection~~ extent such communication does not ~~restrict (x) the Investor Directors from participating as members~~ constitute a “solicitation” of ~~the Issuer Board and any committees thereof in their capacity~~ “proxies,” as such terms are defined or used in Regulation 14A under the Exchange Act and the number of persons with whom such Purchaser communicates is fewer than ten (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d10); or (viiv) ~~enter into~~ make a request to amend or waive any ~~discussions or arrangements with any third party~~ provision of this Section 5.5(a). Notwithstanding the above provisions under this Section 5.5(a), with respect to each case under items (i) – (iii) above, if at any time the Company issues any Company Securities (except for any Company Securities issued or granted pursuant to the employee share incentive plan of the ~~foregoing~~ Company existing as of the date hereof (~~except~~ but such exception shall not apply to any future amendments which may be made to such plan)) or sells any treasury ADSs, each Purchaser shall have the right to acquire such number of Company Securities in order to maintain the same percentage ownership it owns in the Company prior to such issuance or sale of such Company Securities or treasury ADSs (as ~~otherwise expressly provided herein~~applicable) (on a fully diluted and as converted basis as defined in the Exhibit C). (eb) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) purposes of this ~~Section 1.1(f) has occurred and resulted~~ Agreement, a Person shall be deemed to have “Beneficial Ownership” of any securities in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group respect of which such ~~third party~~ Person or any such Person’s Affiliates is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor considered to be ~~elected or appointed to~~ a “Beneficial Owner” under Rule 13d-3 under the ~~Issuer Board~~ Exchange Act as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect ~~or (y)~~ on the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsdate hereof. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Subscription Agreement (Tencent Holdings LTD)

Standstill. (a) From ~~and after~~ the date ~~hereof~~hereof through the date when (i) as a result of voluntary sales of Common Stock by the Investor, the ~~Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership~~ number of shares of ~~Issuer~~ Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition Stock held by the Investor ~~Affiliates of Beneficial Ownership of Issuer Common Stock~~ drops below seventy-five percent (i75%) ~~pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ of the ~~Investor in Section 4.2(d) hereof is not true and correct),~~ Initial Share Number or (ii) as a result of the Investor’s failure to exercise its Preemptive Rights and any ~~stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available~~ voluntary sales by the ~~Issuer or any Subsidiary thereof to holders~~ Investor of ~~Issuer~~ Common Stock, the number of Issued Shares held by the Investor drops below ten percent (10%) of the total number of issued and outstanding shares of Common Stock (~~or other equity securities~~ the “Standstill Period”), the Investor agrees that it will not, without the prior written consent of the ~~Issuer)~~Company, ~~including rights offerings and distributions made generally~~ directly or indirectly, alone or in concert with any other Person, acquire, offer to ~~holders~~ acquire, or agree to acquire, by purchase, gift, business combination or otherwise, beneficial ownership of ~~Issuer~~ any Common Stock in excess of twenty-one percent (~~or other equity securities~~ 21%) (the “Standstill Threshold”) of the ~~Issuer) as a result of their ownership of Issuer~~ Common Stock ~~(or other equity securities~~ then outstanding; provided, however, that the Company shall, as soon as reasonably practicable, inform the Investor of any change in the number of outstanding shares of Common Stock since the last Public Disclosure of the ~~Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result~~ total issued and outstanding Common Stock of the ~~exercise~~ Company in excess of one quarter of one percent (~~or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors~~0.25%). . (b) Notwithstanding ~~the provisions~~ any provision of Section ~~1.1(a~~4.1(a), ~~at any time following~~ the ~~earlier~~ Investor shall not be in breach of ~~(x) ten (10) days following~~ that section if, solely as a result of repurchases by the ~~date any Third Party commences (within~~ Company of its outstanding Common Stock, the ~~meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming~~ Investor becomes the Beneficial Owner of ~~Issuer~~ shares of Common Stock in excess of the Standstill Threshold, provided that it does not retain beneficial ownership of shares representing in the aggregate more than twenty-two percent (~~or other equity securities~~22%) ~~having Majority Voting Power~~ of the Common Stock then outstanding (~~such offer, a~~ the “~~Third Party Offer~~Investor Threshold”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In If Investor should become the ~~event~~ Beneficial Owner of Common Stock in violation of either Section 4.1(a) or Section 4.1(b), Investor shall, as soon as it becomes aware of any such violation, give prompt notice to the Company of such violation. Immediately upon its giving of any such notice, or upon its receipt of any notice of such violation from the Company, the Investor shall, and shall cause its Affiliates ~~make~~ to, refrain from acquiring beneficial ownership of any additional shares of Common Stock and within ten (10) Business Days after its giving or receipt of such notice shall, and shall cause its Affiliates to, dispose of Common Stock such that Investor shall not beneficially own Common Stock in excess of the Standstill Threshold; provided, however, that any sales required hereunder will not be taken into account for a ~~Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included~~ period of five (5) years thereafter in ~~the applicable offering document for such Permitted Offer~~determining whether a Nomination Forfeiture Event shall have occurred. (d) ~~Except as provided in or permitted~~ Prior to the Closing of the transactions contemplated by ~~Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer~~the Acquisition Agreement, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Company has amended Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%1(a) of the ~~Issuer Common Stock is commenced~~ Rights Agreement dated June 21, 2006 (~~within~~ the ~~meaning of Section 14(d~~“ Share Rights Plan”) of to read in its entirety as set out in the ~~Exchange Act)~~ First Amendment to Rights Agreement annexed as Schedule 3 hereto (the “Rights Plan Amendment”). The Company agrees that changes effected by ~~a third Person which, for~~ the ~~avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result~~ Rights Plan Amendment will be maintained in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuereffect, and ~~either (1)~~ the ~~Issuer Board recommends that~~ Share Rights Plan shall not without the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations prior written consent of the Investor ~~under Section 3.2, in~~ be further amended or revised to change the ~~event that~~ Standstill Threshold or the ~~Persons designated by~~ Investor Threshold or affect the ability of the Investor to ~~be elected or appointed to~~ maintain its level of investment in the ~~Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to~~ Company until the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect end of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsStandstill Period. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investor Rights Agreement (Imation Corp)

Standstill. ~~(a) From and after~~ During [***] neither NOVARTIS nor any of its Affiliates will acquire or hold, or without the ~~date hereof~~prior approval of the VERTEX Board of Directors, ~~the Investor~~ will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments propose to acquire ~~such ownership that derive their value (in whole~~ or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a)hold, at any ~~time following~~ time, of record or beneficially, more than [***] of the ~~earlier~~ outstanding voting securities of VERTEX, nor will NOVARTIS participate in a group (~~x) ten (10) days following~~ as the ~~date any Third Party commences (within the meaning of~~ term "group" is referenced in Section 14(d) of the U.S. Securities Exchange ~~Act~~Act of 1934 and Regulations promulgated thereunder) which acquires or holds, or proposes to acquire or hold, such amount of securities during the referenced time period; provided that NOVARTIS shall not be required to reduce its share holdings if its ownership percentage increase above [***] by reason of the actions of VERTEX, including without limitation any recapitalization or repurchase of shares by VERTEX. Notwithstanding the foregoing: (A) if a tender ~~or exchange~~ offer ~~which, if consummated, would result in such Person becoming~~ directed toward the ~~Beneficial Owner~~ acquisition of ~~Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period,~~ more than [***] of the ~~Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase~~ voting securities of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends VERTEX is commenced by a Third Party ~~Offer~~ who is not then or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of that tender offer a member of a "group" in which NOVARTIS is participating, then NOVARTIS may during the pendency of that tender offer commence a competing tender offer, and may thereafter complete that offer in accordance with its terms (as revised from time to time), notwithstanding any limitation on the acquisition or holding of VERTEX shares as set forth above; provided that if any such ~~Permitted Offer~~tender offer by NOVARTIS is not completed or is withdrawn, the ~~Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities~~ provisions of this Section 12.16 shall thereafter apply to any CONFIDENTIAL TREATMENT REQUESTED subsequent share acquisitions by NOVARTIS as if the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate previous tender offer had not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together)occurred; (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, if VERTEX shall make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it intends to enter into a transaction which will result in the acquisition of a controlling interest in VERTEX's voting securities by a Third Party which is ~~seeking to sell itself and~~not a member of a "group" that includes NOVARTIS, ~~in such event, such announcement is made~~ then at any time thereafter and during the period ending with the ~~approval~~ closing of any such transaction or the public announcement of its termination, NOVARTIS may make a competing proposal for a transaction with VERTEX or for VERTEX's shares, and the provisions of the ~~Issuer Board;~~ first sentence of this Section 12.16 shall not operate to prevent the completion of any such proposal or require the sale or divestiture of any VERTEX shares acquired by NOVARTIS during that period; and (~~iii~~C) ~~subject~~ if a Third Party which is not a member of a "group" that includes NOVARTIS, should acquire more than [***] of VERTEX's voting securities, then, during such period as that Third Party owns more than [***] of VERTEX's voting securities, NOVARTIS is entitled to increase its holdings of VERTEX's voting securities, by purchase from Third Parties, to an amount which will not exceed, at the ~~obligations~~ time of the ~~Investor under Section 3.2~~share purchase by NOVARTIS, the amount owned by such Third Party. This limitation shall not be applicable if the provisions set forth in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsotherwise apply. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Research and Early Development Agreement (Vertex Pharmaceuticals Inc / Ma)

Standstill. (a) From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation Each member of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, ValueAct Group agrees that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the ~~pendency~~ Restricted Period, neither it nor any of ~~such Permitted Offer~~its Affiliates will, ~~the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof~~unless specifically requested by, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved authorized in writing by ~~Issuer~~a resolution of, the ~~Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner~~Board, directly or indirectly: (ia) ~~enter into or agree,~~ effect or ~~seek~~seek to effect, offer or propose ~~(whether publicly or otherwise)~~ to effect, or ~~announce any intention to effect or~~ cause or participate in in, or in any way ~~assist,~~ assist or facilitate ~~or encourage~~ any other ~~Person~~ person or entity to effect or seek, offer or propose ~~(whether publicly or otherwise)~~ to effect or participate in: , (Ai) ~~except to the extent otherwise specifically permitted by this Agreement,~~ any acquisition (or sale) of any ~~Issuer Common Stock (~~material assets or ~~Beneficial Ownership thereof)~~ businesses, of the Company or any ~~material portion~~ of ~~the assets of Issuer and~~ its ~~Subsidiaries~~ subsidiaries, (~~taken together); (B~~ii) any tender offer or exchange offer, ~~merger or other business combination involving Issuer or any of its Subsidiaries (provided~~merger, ~~that~~acquisition, ~~this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or~~ share exchange ~~offer, merger~~ or other business combination involving the ~~Issuer~~ Company or any ~~Subsidiary thereof~~ of its subsidiaries, or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~iii) any recapitalization, extraordinary or special dividend, restructuring, liquidation, disposition, dissolution or other extraordinary transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries~~subsidiaries or any material portion of its or their businesses (any such transaction described in this subparagraph (a), an “Extraordinary Transaction”); provided, however, that nothing in this subparagraph (a) shall prevent the ValueAct Group from voting in favor of any Extraordinary Transaction that has been approved or recommended by the Board, or voting against any Extraordinary Transaction that has not been approved and recommended by the Board; (b) purchase or cause to be purchased or otherwise acquire or agree to acquire economic ownership (as defined below) of (i) any Common Stock, if in any such case, immediately after the taking of such action the ValueAct Group, together with their respective Affiliates, would, in the aggregate, economically own more than 14.9% of the then outstanding shares of Common Stock; provided, however, that it shall not be a breach of this subparagraph (b) if the ValueAct Group’s economic ownership of shares of Common Stock exceeds such 14.9% limitation solely as a result of share purchases, reverse share splits or other similar actions taken by the Company that by reducing the number of shares of Common Stock outstanding cause the ValueAct Group’s economic ownership to exceed such 14.9% limitation, so long as the ValueAct Group’s economic ownership shall not increase thereafter (except solely as a result of further share purchases, reverse share splits or other similar actions taken by the Company), unless and until the ValueAct Group’s economic ownership before and after such subsequent increase does not exceed such 14.9% limitation, or (ii) ~~except~~ any other securities issued by the Company; (c) seek to call, or to request the call of, or call a special meeting of the stockholders of the Company, or seek to make, or make, a stockholder proposal (whether pursuant to Rule 14a-8 promulgated by the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as ~~provided~~ amended (the “Exchange Act”) or otherwise) at any meeting of the stockholders of the Company, or seek election to the Board, seek to place a representative on the Board or seek the removal of any director from the Board, or otherwise acting alone, or in ~~Article 3~~concert with others, ~~make~~ seek to control, advise, change or influence the management, Board, governance instruments, policies or affairs of the Company; (d) form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common Stock or deposit any shares of Common Stock in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement, or grant any proxy with respect to any shares of Common Stock (other than to a designated representative of the Company pursuant to a proxy solicitation on behalf of the Board), other than solely with other members of the ValueAct Group or one or more Affiliates of the ValueAct Group with respect to the shares of Common Stock acquired in compliance with subparagraph (b) above; (e) solicit proxies or written consents of stockholders, or make, or in any way participate in~~, directly or indirectly~~, any “solicitation” of any “~~proxies~~proxy” ~~(as such terms are defined under Regulation 14A~~ within the meaning of Rule 14a-1 promulgated by the SEC under the Exchange ~~Act~~Act (but without regard to the exclusion set forth in Rule 14a-1(l)(2)(iv) from the definition of “solicitation”) to ~~vote~~vote any shares of Common Stock with respect to (i) any matter described in subparagraphs (a) through (c) above, (ii) any Extraordinary Transaction, (iii) any material change in the present board of directors or management of the Company or any subsidiary or division thereof, including, without limitation, any plans or proposals to change the number or the term of directors, to remove any director or to fill any existing vacancies on the board, or to change any material term of the employment contract of any executive officer, (iv) the opposition of any person nominated, or the nomination of any person not nominated, by the Company’s management or nominating committee, (v) any material change in the Company’s capital structure or business, or (vi) any other action to or seek to ~~advise~~ control, advise, change or influence the management, the Board, governance instruments, policies or affairs of the Company; provided, however, that nothing in this subparagraph (e) shall prevent the ValueAct Group from voting in favor of any ~~Person~~ Extraordinary Transaction that has been approved or recommended by the Board, or voting against any Extraordinary Transaction that has not been approved and recommended by the Board; (f) make any public announcement with respect to any matter described in subparagraphs (a) through (e) above; (g) enter into any discussions, negotiations, agreements or understandings with any person or entity with respect to any of the ~~voting of~~foregoing, advise, assist, encourage, support or seek to persuade others to take any ~~Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than~~ action with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members any of the ~~Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately~~foregoing, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with ~~any Person, in each case,~~ others or as part of a group (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members any of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B);foregoing; or (ivh) take any action ~~which would or would~~ that could reasonably be expected to ~~force Issuer~~ require the Company to make a public announcement regarding the possibility of any of the ~~types of matters set forth~~ events described in ~~clause~~ subparagraphs (ia) through (g) above~~; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)~~; or (vii) ~~enter into any discussions~~ request the Company or ~~arrangements with any third party with respect to~~ any of ~~the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated~~ its Affiliates, directly or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, andindirectly, in any ~~such case, such proceeding~~ public manner to amend or ~~petition~~ waive any provision of this paragraph (including this subparagraph). Nothing in this Section 1 shall ~~continue undismissed for sixty (60) days or an order or decree approving or ordering~~ limit any actions that may be taken by Xx. Xxxxxxxx acting solely in his capacity as a director of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent Company consistent with his fiduciary duties to the ~~institution of, or fail to contest in~~ Company’s stockholders as a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion director of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the InvestorCompany.

Appears in 1 contract

Samples: Shareholder Agreement (BigBand Networks, Inc.)

Standstill. ‌ 8.1 Except as otherwise set out in this Agreement, until either (i) the Joint Bid has become unconditional in all respects (and where the entire issued share capital of the Target has been acquired by Bidco and the Joint Bid consideration has been settled in full); or (ii) this Agreement has been terminated, whichever is earlier and except to implement the Joint Bid as agreed by the Steering Committee: (a) ~~From~~ no Party shall (and ~~after~~ each Party shall procure that no person "acting in concert" with it (as such term is defined in the ~~date hereof~~Code) (including Bidco) shall), either alone or acting in concert with others acquire or offer to acquire, or cause‌ another person to acquire or to offer to acquire, an interest in any shares or other securities in the ~~Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock,~~ Target (including for ~~purposes of this Section 1.1(a~~these purposes, securities carrying subscription or conversion rights relating to the Target's shares or securities, or derivatives or contracts for differences referenced to the Target's shares) ("Target Securities"), ~~rights, options~~ or ~~other derivative securities~~ enter into an agreement or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) arrangement as a result of ~~any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer~~ which it or any ~~Subsidiary thereof~~ person may acquire any interest in Target Securities, other than acquiring or offering to ~~holders of Issuer Common Stock (~~acquire Target Securities from the Target or ~~other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (~~entering into any agreement or ~~other equity securities of the Issuer)~~ arrangement as a result of ~~their ownership~~ which Target Securities may be acquired which is for the purpose of ~~Issuer Common Stock~~ preventing or remedying a Default or potential Default and which does not involve acceptance of or agreement to accept another takeover offer for the Target; and (b) no Party shall (and each Party shall procure that its Affiliates shall not) sell, transfer or ~~other equity securities~~ otherwise dispose of ~~the Issuer) including pursuant~~ or cause another person to ~~a shareholder rights plan~~ sell, transfer or ~~similar plan~~ otherwise dispose of any interest in Target Securities or ~~agreement, (iii)~~ enter into an agreement or arrangement or accept any offer from any third party as a result of ~~the exercise (~~which it or ~~exchange)~~ any person may sell, transfer or otherwise dispose of any ~~rights distributed by the Issuer pursuant~~ interest in Target Securities. 8.2 Each Party accepts, and agrees to ~~clause (ii) above~~advise their Authorised Recipients, ~~(iv) in accordance with a Permitted Offer~~ that some or ~~(v) which has been approved by a majority~~ all of the ~~Non-Investor Directors. (b) Notwithstanding~~ Confidential Information and the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary Joint Bid negotiations may be price sensitive information relating to ~~prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant~~ Target Securities and agrees to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203)comply, and ~~(z) at any time following December 31~~shall procure that their Authorised Recipients comply, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all ~~information concerning the Issuer required by the Exchange Act~~ applicable insider dealing and market abuse legislation in relation to ~~be included~~ dealings in ~~the applicable offering document for such Permitted Offer~~Target Securities. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Joint Bidding Agreement

Standstill. (a) ~~From~~ During the period commencing at the Effective Time and ~~after~~ ending on the ~~date~~ Standstill Termination Date (as defined below) (the “Standstill Period”), provided that the Company is not in breach of its obligations under this Agreement (including Section 1 hereof), each of the ~~Investor will~~ Principal Stockholders shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its controlled Affiliates not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) ~~enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or~~ engage in any ~~way assist, facilitate~~ hostile or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction takeover activities with respect to ~~Issuer~~ the Company (including by means of a tender offer or ~~any of its Subsidiaries~~soliciting proxies or written consents, other than as recommended by the Board); (ii) ~~except~~ acquire or propose to acquire additional Common Stock or other securities of the Company or any securities of its subsidiaries; provided, however, that the foregoing shall not prohibit the acquisition or proposal to acquire additional Common Stock or other Company securities that in the aggregate, together with such Party’s and its Affiliates’ beneficial ownership of any other Common Stock or other securities of the Company, does not cause such Party’s and its Affiliates’ aggregate beneficial ownership to exceed nineteen and ninety-nine hundredths percent (19.99%) of either the outstanding Common Stock or the voting power of the outstanding securities of the Company; provided, further, that the foregoing shall not prohibit and the Principal Stockholders shall have the right to participate pro rata, based on their respective beneficial ownership percentage of the outstanding Common Stock, in any equity capital raise by the Company or any of its subsidiaries; (iii) call a special meeting of the Stockholders; or (iv) seek additional representation on the Board or propose to nominate or remove, or vote to remove, any Directors of the Company (other than such Party’s Designated Directors, as ~~provided~~ applicable, in ~~Article 3~~accordance with Section 1). (b) Specifically, ~~make~~ but without limiting Section 3(a), during the period commencing at the Effective Time and ending on the Standstill Termination Date, without the prior written consent of the Company, each of the Principal Stockholders shall not, and shall cause its controlled Affiliates not to, directly or ~~participate in~~indirectly: (i) propose to enter into, directly or indirectly, any merger, consolidation, recapitalization, business combination, partnership, joint venture, acquisition or similar transaction involving the Company or any of its Affiliates or their properties, except as expressly permitted hereby; (ii) make or in any way participate in any “solicitation” of “proxies” (as such terms are ~~defined under~~ used in Rule 14a-1 of Regulation 14A under the Exchange Act) or written consents to vote, or seek to influence, or advise ~~or influence any Person or entity~~ others with respect to the voting ~~of,~~ of any ~~Issuer Common Stock~~ voting securities of the Company or any ~~demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ its Affiliates (other than ~~with respect to matters related to the Investor~~in a Designated Director’s ~~exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating~~ capacity as ~~members~~ a member of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesBoard); (iii) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or ~~in any way~~ participate in a ~~13D Group or otherwise act in concert with any Person, in each case,~~ “group” (within the meaning of Section 13(d) of the Exchange Act) with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members any voting securities of the ~~Issuer Board and~~ Company or any ~~committees thereof in their capacity~~ of its Affiliates (other than any group that may have been formed among the Principal Stockholders as ~~such and (y) the Investor from joining or in any way participating in~~ a ~~13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B~~result of this Agreement); (iv) ~~take any action which would~~ act to seek to control or ~~would reasonably be expected to force Issuer to make a public announcement regarding any~~ influence the management, Board or policies of the ~~types of matters set forth in clause (i) above~~Company, except through such Party’s applicable Designated Directors or as permitted by Section 3(c); (v) ~~bring any action~~propose to remove, or ~~otherwise act~~vote to remove, any Directors of the Company (other than pursuant to ~~contest~~ the ~~validity~~ exercise of such Party’s right to nominate Designated Directors pursuant to Section 1); (vi) publicly disclose any intent, plan or arrangement inconsistent with this Agreement; or (vii) advise, assist, publicly propose or encourage others in connection with the above. (c) Notwithstanding the foregoing provisions of this Section ~~1.1(d)~~3, the foregoing provisions shall not, and are not intended to: (i) prohibit the ACII Entities or their respective Affiliates from providing the Company or its Affiliates assistance with operational and managerial matters or financial advisory services consistent with past practices; (ii) prohibit any Principal Stockholder or its controlled Affiliates from privately communicating with, including making any offer or proposal to, the Board; (iii) restrict in any manner how any Principal Stockholder or its controlled Affiliates vote their Common Stock or other Company securities, except as provided in Section 2; (iv) restrict the manner in which any Designated Director may (A) vote on any matter submitted to the Board or the Stockholders, (B) participate in deliberations or discussions of the Board (including making suggestions or raising issues to the Board) in his or her capacity as a member of the Board, or (C) take actions required by his or her exercise of legal duties and obligations as a member of the Board or refrain from taking any action prohibited by his or her legal duties and obligations as a member of the Board; (v) restrict any Principal Stockholder or any of its Affiliates from selling or transferring any of their Company securities; or (vi) ~~enter into any discussions~~ limit, restrict or ~~arrangements with any third party with respect to~~ impair the Principal Stockholders or any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, thattheir respective Affiliates’ ability, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance connection with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made action conducted with the approval of the ~~Issuer Board;~~ Board (~~iii~~provided that no such Board approval shall be required with respect to clauses (D) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (yE) ~~if so nominated are not so elected~~ below), to ~~the Issuer Board,~~ directly or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall indirectly (A) ~~voluntarily commence any proceeding or file any petition seeking liquidation~~propose, ~~reorganization~~ commit on, participate in and/or make a loan or other ~~relief under~~ debt financing to the Company or any ~~federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect~~of its subsidiaries, (B) ~~consent~~ propose, commit on, participate in and/or provide debt financing to a prospective buyer regarding the Company or any of its subsidiaries or assets in a negotiated transaction with the Company, finance a third party’s effort to make a loan or other debt financing to the ~~institution of,~~ Company or ~~fail to contest~~ any of its subsidiaries in a ~~timely and appropriate manner,~~ negotiated transaction with the Company or any ~~proceeding or petition described in clause (A) above~~of its subsidiaries, (C) ~~apply for or consent~~ participate in any process conducted pursuant to which the ~~appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer~~ Company or any ~~material Subsidiary or for a substantial part~~ of its ~~assets~~subsidiaries proposes to issue any additional equity interests, arrange for any debt financing or in which any of the businesses or assets of the Company or any of its subsidiaries are proposed to be sold or otherwise disposed of, in each case in accordance with the parameters of such process, (D) ~~file an answer admitting~~ submit a proposal to the ~~material allegations~~ Board relating to the acquisition of all or substantially all of the assets or equity of the Company and its subsidiaries if the Company has entered into a ~~petition filed against it in any such proceeding,~~ definitive agreement with respect to the sale of all or substantially all of the assets or equity of the Company and its subsidiaries or (E) ~~make a general assignment for~~ purchase debt of the ~~benefit of creditors.~~ Company or its subsidiaries in secondary market transactions. The term “debt” as used in this paragraph shall include institutional debt (~~g) So long as the Investor Percentage Interest is equal to~~ bank or ~~greater than fifteen percent (15%~~otherwise), ~~the Issuer agrees not to enter into any agreement regarding a (i) merger~~commercial paper, ~~(ii) consolidation~~notes, ~~(iii) Change~~ debentures, bonds, other evidences of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d)indebtedness, and ~~so long as the Investor Percentage Interest is equal to~~ debt securities, but shall not include any debt convertible or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investorexchangeable for equity.

Appears in 1 contract

Samples: Nomination and Director Voting Agreement (Stonemor Inc.)

Standstill. During the period from and after the effectiveness of the Collaboration Agreement and expiring upon the expiration or termination of the Research Term, provided that (i) if the Research Term or the Collaboration Agreement is terminated by the Investor pursuant to Section 11.2 or Section 11.3 of the Collaboration Agreement, the expiration date shall be one (1) year after such termination and (ii) if as of the expiration or termination of the Research Term or the Collaboration Agreement the Standstill Parties (as defined below) beneficially own greater than nineteen and ninety-nine one hundredths percent (19.99%) of the Shares of Then Outstanding Common Stock, the expiration date shall be the earlier of (A) two (2) years following the date of such expiration or termination and (B) the date on which the Standstill Parties beneficially own less than fifteen percent (15%) of the Shares of Then Outstanding Common Stock (such period, the “Standstill Term”), neither the Investor nor any of its Controlled Affiliates (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Controlled Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of shares of ~~Issuer~~ Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes~~ except pursuant to (i) a stock split, stock dividend, recapitalization, reclassification or similar transaction of ~~this Section 1.1(a)~~the Company or (ii) a direct purchase from the Company, ~~rights~~or make a tender, ~~options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ shares of Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 3.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership~~ shares constituting Shares of ~~Issuer~~ Then Outstanding Common Stock ~~(i) pursuant to~~ is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of ~~any stock splits~~a repurchase by the Company of shares of Common Stock, stock ~~dividends~~ split, stock dividend or ~~other distributions or recapitalizations or similar offerings made generally available by~~ a recapitalization of the ~~Issuer or~~ Company, the Standstill Parties shall not be required to dispose of any ~~Subsidiary thereof to holders~~ of ~~Issuer~~ their holdings of shares of Common Stock and/or Common Stock Equivalents even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or ~~other equity securities~~ indirectly, seek to have called any meeting of the ~~Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities~~ stockholders of the ~~Issuer) as a result~~ Company, propose or nominate for election to the Company’s Board of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding~~ Company’s Board of Directors or cause to be voted in favor of such person for election to the ~~provisions~~ Company’s Board of ~~Section 1.1(a), at~~ Directors any ~~time following the earlier~~ shares of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer and/or Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common StockEquivalents; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer.ACTIVE/100319021.2 (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “~~solicitation” of “proxies~~Offeror” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is shall not an include the Investor ~~Affiliate (and not involving any breach of Section 1.1(d~~or its Affiliates)) the consummation of which would result in a Change of Control of the Company (an “Acquisition Proposal”); provided, however, that from and after the filing of a Schedule 14D-9 (or successor form of Tender Offer Solicitation/Recommendation Statement under Rule 14D-9 of the Exchange Act) by the Company recommending that stockholders accept any such offer, the Investor shall not be prohibited from taking any of the actions otherwise prohibited by this Section 3.1(c) for so long as the Company maintains and does not withdraw such recommendation; (d) directly or indirectly, solicit proxies or consents or become a participant in a solicitation (as such terms are defined in Regulation 14A under the Exchange Act) in opposition to the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to influence any Person, with respect to voting of any shares of Common Stock and/or Common Stock Equivalents; (e) deposit any shares of Common Stock and/or Common Stock Equivalents in a voting trust or subject any shares of Common Stock and/or Common Stock Equivalents to any arrangement or agreement with respect to the voting of such shares of Common Stock and/or Common Stock Equivalents; (f) propose (i) any merger, consolidation, business combination, tender ~~offer~~ or exchange offer, ~~if consummated~~purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any recapitalization, restructuring, liquidation or other extraordinary transaction with respect to the Company; (g) act in concert with any Third Party to take any action in clauses (a) through (f) above, or form, join or participate in a “partnership, limited partnership, syndicate, or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company; (h) enter into discussions, negotiations, arrangements or agreements with any Person relating to the foregoing actions referred to in (a) through (g) above; or (i) request or propose to the Company’s Board of Directors, any member(s) thereof or any officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause (i)); provided, however, that (A) nothing contained in this Section 3.1 shall prohibit the Investor from making confidential, unsolicited, non-public proposals to the Company for a transaction of the type described in the foregoing clause (f) that would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control ~~Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effectCompany, (B) ~~consent to~~ the ~~institution of,~~ mere voting in accordance with Section 5 hereof of any voting securities of the Company held by the Investor or ~~fail to contest in~~ its Controlled Affiliates shall not constitute a ~~timely and appropriate manner,~~ violation of any ~~proceeding or petition described in clause~~ of clauses (Aa) through (h) above, and (C) ~~apply for or consent~~ nothing contained in this Section 3.1 shall prohibit the Investor from proposing to the ~~appointment~~ applicable committee of ~~a receiver, trustee, custodian, sequestrator, conservator or similar official for~~ the ~~Issuer or any material Subsidiary or for a substantial part~~ Company’s Board of ~~its assets,~~ Directors (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees and not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior pursuant to the ~~execution of such agreement,~~ advance notice provisions set forth in the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%Company’s bylaws), in a ACTIVE/100319021.2 confidential, non-public manner, potential director candidates for consideration by such committee, which candidates the ~~event (i)~~ Investor believes would be in the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion best interest of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, Company and ~~make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~its stockholders.

Appears in 1 contract

Samples: Investor Agreement (Alnylam Pharmaceuticals, Inc.)

Standstill. Without the prior approval of the Company, from the Effective Date until the twenty-four (a24) ~~From and after~~ month anniversary of the ~~date hereof~~Effective Date, the Investor agrees that it will not, and will cause ~~each Investor Affiliate not to~~its Affiliates to not, directly or indirectly: a) purchase, offer to purchase, or agree to purchase or otherwise acquire ~~Beneficial Ownership~~ beneficial ownership (as determined in accordance with Rule 13d-3 and Rule 13d-5 under the Exchange Act) of ~~shares of Issuer~~ any Common Stock, ~~including for purposes of this Section 1.1(a), rights, options~~ or ~~other derivative~~ any securities convertible or ~~contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer~~ exchangeable into Common Stock, ifexcluding any shares of Common Stock acquired pursuant to the transactions contemplated in the Collaboration Agreement; b) make, ~~after giving effect~~ or participate in, any solicitation of proxies to vote any voting securities of the Company or any of its subsidiaries, or propose to change or control the management or board of directors of the Company by use of any public communication to holders of securities intended for such ~~acquisition, the Investor’s Investor Percentage Interest would exceed the Cap;~~ purpose; provided, however, that ~~such restriction on acquisitions will not be applicable with respect~~ nothing in this Section 10.5 shall limit the Investor’s ability to vote or transfer (subject to Sections 10.3 and 10.4 hereof) its Common Stock; c) make a public proposal for a Change of Control, including a merger, consolidation or other business combination transaction or tender offer related thereto, or the purchase of all or substantially all of the assets of the Company and its subsidiaries; or d) knowingly encourage, accept, or support a tender, exchange, or offer proposal by any Person other than the Investor, the consummation of which would result in a Change of Control. Notwithstanding anything to the ~~acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock~~ contrary contained in this Agreement, (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), if at any time ~~following the earlier of~~ (xA) ~~ten (10) days following the date any~~ a Third Party ~~commences (within~~ enters into an agreement with the ~~meaning~~ Company contemplating a Change of ~~Section 14(d)~~ Control, including a merger, consolidation or other business combination transaction or tender offer related thereto, or the purchase of all or substantially all of the ~~Exchange Act~~assets of the Company and its subsidiaries, or publicly announces its intention to do so, then the foregoing restrictions set forth in this Section 10.5 shall be suspended and of no further force or effect until the termination of such agreement or the public announcement of a withdrawal or abandonment of such intention, at which time such restrictions will be reinstated and apply in full force and effect or (B) a ~~tender~~ Third Party commences, or ~~exchange~~ publicly announces an intention to commence, a tender, exchange, or offer ~~which~~that, if consummated, would result in ~~such Person becoming the Beneficial Owner~~ a Change of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offerControl, then ~~in each case,~~ the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements foregoing restrictions set forth in this Section ~~1.1(b)~~10.5 shall be suspended and of no force or effect until the expiration or termination of a tender, ~~a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender~~ exchange or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is offer that has been commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of ~~such Permitted Offer and (y) commencement~~ a withdrawal or abandonment of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any an intention to ~~effect~~ commence a tender, exchange or ~~cause or participate~~ offer at which time such restrictions will be reinstated and apply in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer full force and ~~its Subsidiaries (taken together)~~effect; (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) ~~except as provided in Article 3, make~~ the Investor shall not be precluded from making any confidential offers or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect proposals to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person, in each case, with respect~~ manner reasonably believed not to require the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer Company to make a public announcement ~~regarding any~~ of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or ~~does~~ proposal; provided that Investor shall not ~~recommend against the tender offer~~ publicly disclose any such offers or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; proposals; and (iii) ~~subject to the obligations~~ Investor and its Affiliates shall not be precluded from owning or acquiring interests in mutual funds or similar entities that own capital stock of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d)Company, and ~~so long as the Investor Percentage Interest is equal to~~ nothing herein shall prohibit passive investments by pension or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change employee benefit plans of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Share Purchase Agreement (Xenon Pharmaceuticals Inc.)

Standstill. ~~(a) From and after the date hereof~~6.1.1 The standstill obligation, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set ~~forth~~ out in this ~~Section 1.1(b)~~Article 6.1, a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates take effect as of the ~~date such Permitted Offer is commenced, disregarding for purposes~~ Date of ~~calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”)~~ this Agreement and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, will terminate on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the ~~public announcement of such Permitted Offer~~ date that is ten (10) years following the date on which the Closing occurs and (y) ~~commencement~~ the termination of ~~such Permitted Offer~~this Agreement if the Closing does not occur (the “Standstill Period”). ~~(c) In~~ 6.1.2 During the ~~event the Investor Affiliates make a Permitted Offer~~Standstill Period, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by IssuerInvestor, the ~~Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of~~ Parent Investor or any ~~Investor Affiliate not to~~of their Affiliates, ~~in any manner, directly or indirectly~~shall not: (i) ~~enter~~ without the express written consent of the Issuer, directly or indirectly acquire any additional Equity Securities (other than the Warrants) of the Issuer, if after giving effect to such acquisition the Investor, the Parent Investor, any of the Affiliates of the Investor or the Parent Investor, or any other party Acting in Concert with the Investor, the Parent Investor or any of the Affiliates of the Investor or the Parent Investor would (without taking into account the Warrants or the shares issuable (but not yet issued) thereunder owned by them at that time) together in the aggregate directly or indirectly own or have the right to acquire more than 29.9% of the then issued and outstanding voting securities of the Issuer (assuming the exercise, conversion or exchange of any Equity Securities held by any of them at any time (other than the Warrants) that are exercisable, convertible or exchangeable into or ~~agree~~for shares of the Issuer at such time) (the resulting number of securities rounded down) (the “Standstill Limit”); (ii) directly or indirectly encourage or support a tender, ~~effect~~ exchange or ~~seek,~~ other offer or proposal by a third party; (iii) propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (Ba) any merger, consolidation, business combination, tender or exchange offer, ~~merger~~ purchase of the Issuer’s assets or ~~other business combination involving Issuer~~ businesses, or ~~any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination~~ similar transaction involving the Issuer or ~~any Subsidiary thereof or~~ (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~b) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (~~other than with respect to matters related to~~ it being understood that the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of Chief Executive Officer may contact the Issuer’s ~~stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek~~ Chief Executive Officer on a non-public and non-committal basis to ~~call a meeting of~~ gauge the Issuer’s ~~stockholders or initiate any stockholder proposal for action by~~ Chief Executive Officer’s views on the Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, potential interest in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition matter described in clause (Aa) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (~~E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%~~b), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.; or

Appears in 1 contract

Samples: Subscription Agreement (Galapagos Nv)

Standstill. ~~(a) From and after~~ During the ~~date hereof~~Cooperation Period, ~~the~~ each Investor Party will not, and will cause ~~each~~ its respective Affiliates and Representatives acting on its behalf (collectively with the Investor ~~Affiliate not to~~Parties, the “Restricted Persons”) to not, directly or indirectly, ~~acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options~~ without the prior written consent or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation authorization of the ~~Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends~~ Company or ~~other distributions or recapitalizations or similar offerings made generally available by~~ the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectlyBoard: (i) ~~enter into or agree~~(A) acquire, ~~effect or seek, offer or propose (whether publicly~~ by purchase or otherwise, alone or in concert with any Third Party, any Company Interests if such acquisition would result in the Investor Parties (together with their Affiliates) having Beneficial Ownership of more than 14.9% of the Common Stock outstanding at such time; (B) acquire, by purchase or otherwise, alone or in concert with any Third Party, indebtedness (or shares of preferred stock) outstanding under Debt Instruments if such acquisition would result in the Investor Parties (together with their Affiliates) holding in excess of 25% of the total aggregate principal amount of indebtedness (and liquidation preference) then outstanding under Debt Instruments (including, for the purposes of this clause, the outstanding amount of any debt drawn under the revolving credit facility as of the most recently filed Form 10-Q or 10-K by the Company, and excluding, any amounts drawn under securitization facilities); (C) Transfer any Company Interests to a Restricted Transferee in one or a series of related (x) private transactions and/or (y) other transactions where the purchaser in the Transfer is actually known to the Restricted Persons to be a Restricted Transferee; (D) Transfer all or substantially all, directly or indirectly, of the voting rights of the underlying Common Stock held by the Restricted Persons to any Third Party decoupled from such underlying Common Stock, or (E) effect, ~~or announce any intention to effect or~~ cause or knowingly participate in in, or in any way knowingly assist, facilitate or encourage any ~~other Person~~ Third Party to effect or seek, offer or propose ~~(whether publicly or otherwise)~~ to effect or participate in: , an Extraordinary Transaction (Ait being understood that the foregoing shall not restrict the Restricted Persons from tendering (or failing to tender) ~~except~~ shares, receiving consideration or other payment for shares, voting its Voting Securities “for” or “against” any Extraordinary Transaction, or otherwise participating in any Extraordinary Transaction on the same basis as other stockholders of the Company, or from directing any contact from a Third Party which may contemplate such an Extraordinary Transaction to the ~~extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (~~Company or ~~Beneficial Ownership thereof) or any material portion of the assets of Issuer and~~ its ~~Subsidiaries (taken together~~Representatives); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call ~~a meeting of Issuer’s stockholders~~ (publicly or ~~initiate any stockholder proposal for action by Issuer’s stockholders~~otherwise), ~~form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act~~ alone or in concert with others, ~~to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members~~ a meeting of the ~~Issuer Board and any committees thereof~~ Company’s stockholders or act or seek to act by written consent in ~~their capacity as such and~~ lieu of a meeting (yor the setting of a record date therefor), (B) ~~the Investor from joining~~ seek, alone or ~~in any way participating in a 13D Group or otherwise acting~~ in concert with ~~any Person~~others, ~~in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would~~ election or ~~would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action~~appointment to, or ~~otherwise act~~representation on, the Board or nominate or propose the nomination of, or recommend the nomination of, any candidate to ~~contest~~ the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (~~Board, except as ~~otherwise~~ expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section ~~1.1(d~~1, (C) make or be the proponent of any stockholder proposal to the Company or the Board or any committee thereof to be voted on by the stockholders of the Company, (D) seek, alone or in concert with others (including through any “withhold” or similar campaign), the removal of any member of the Board other than the ~~provisions~~ New Director or (E) conduct a referendum of ~~Section 1.1(d)(i)~~stockholders of the Company; (iii) ~~shall not apply (~~make any request for stock list materials or other books and records of the ~~Investor will be permitted to take the actions otherwise prohibited thereunder) if~~ Company or any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated its subsidiaries pursuant to Section ~~1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ 220 of the ~~Issuer Common Stock is commenced (within the meaning of Section 14(d)~~ General Corporation Law of the ~~Exchange Act) by a third Person which~~State of Delaware or any other statutory or regulatory provisions providing for stockholder access to books and records, except, for the avoidance of doubt, ~~is not an Investor Affiliate (and not involving~~ in connection with any ~~breach of Section 1.1(d))~~ matter as to which ~~tender offer~~ any litigation, arbitration or ~~exchange offer, if consummated,~~ other proceeding would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3Section 2(c)(x); (iv) engage in any “solicitation” (as such term is used in the ~~Investor Percentage Interest~~ proxy rules promulgated under the Exchange Act) of proxies or consents with respect to the election or removal of directors of the Company or any other matter or proposal relating to the Company or become a “participant” (as such term is ~~less~~ defined in Instruction 3 to Item 4 of Schedule 14A promulgated under the Exchange Act) in any such solicitation of proxies or consents (other than ~~ten percent (10%~~with respect to the New Director in connection with the actions contemplated by Section 1(a)); (v) make any public proposal concerning the ~~Investor Percentage Interest is greater than fifty percent (50%)~~Company seeking to change the number or identity of directors of the Company or the filling of any vacancies or newly created directorships on the Board, any change in the capital allocation policy, dividend policy of the Company, any other change to the Board or the Company’s management or corporate governance structure or policy, or any waiver, amendment or modification to the Charter or the Bylaws or any Company Policies; (vi) ~~an involuntary proceeding shall be commenced~~ knowingly encourage or ~~an involuntary petition shall be filed seeking~~ advise any Third Party or knowingly assist any Third Party in encouraging or advising any other Person with respect to (A) the giving or withholding of any proxy relating to, or other authority to vote, any Voting Securities, or (B) conducting any type of referendum of stockholders relating to the Company, other than such encouragement or advice that is consistent with the Board’s recommendation in connection with such matter, or as otherwise specifically permitted under this Agreement; (vii) form, join or act in concert with any Group, with respect to any Voting Securities, other than a Group consisting solely of Investor Parties; (viii) enter into a voting trust, arrangement or agreement with respect to any Voting Securities, or subject any Voting Securities to any voting trust, arrangement or agreement (excluding customary brokerage accounts, margin accounts, prime brokerage accounts and the like), in each case other than (A) this Agreement, (B) solely with Investor Parties or Affiliates of the Investor Parties or (C) granting proxies in solicitations approved by the Board; (ix) engage in any short sale or any purchase, sale, or grant of any option, warrant, convertible security, share appreciation right, or other similar right (including any put or call option or “swap” transaction) with respect to any equity security (other than any index fund, exchange traded fund, benchmark fund or broad basket of securities) that (A) includes, relates to, or derives any significant part of its value from a decline in the market price or value of the equity securities of the Company and (B) would, in the aggregate or individually, result in the Investor Parties ceasing to have a “net long position” in equity securities of the Company; (x) ~~liquidation~~institute, ~~reorganization~~ knowingly solicit or join as a party any litigation, arbitration or other ~~relief in respect of~~ proceeding against or involving the ~~Issuer~~ Company or any ~~material Subsidiary or its debts, or of a substantial part~~ of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer subsidiaries or any ~~material Subsidiary or for a substantial part~~ of its ~~assets~~or their respective current or former directors or officers (including derivative actions); provided, ~~and~~however, ~~in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of~~ the foregoing shall not prevent any Restricted Person from (A) bringing litigation against the Company to enforce any provision of this Agreement instituted in accordance with and subject to Section 8, (B) making counterclaims with respect to any proceeding initiated by, or on behalf of, the Company or its Affiliates against a Restricted Person, (C) bringing bona fide commercial disputes and/or enforcing contractual rights that do not relate to the subject matter of this Agreement (including for the avoidance of doubt proceedings with respect to Debt Instruments held by the Investor Parties or their Affiliates), (D) exercising statutory appraisal rights or (E) responding to or complying with validly issued legal process; (xi) make any request or submit any proposal to amend or waive the terms of this Agreement (including this subclause), in each case publicly or in a manner which would reasonably be ~~entered~~expected to result in a public announcement or disclosure of such request or proposal; or (~~vii~~xii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any ~~agreement regarding a (i) merger~~negotiations, ~~(ii) consolidation~~agreements, ~~(iii) Change of Control Transaction~~arrangements, or understandings (ivwhether written or oral) ~~other business combination transaction unless~~with, ~~in each case~~or knowingly encourage, ~~at least ten (10) days prior~~ assist, solicit, or seek to cause, any Third Party to take any action that the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits Restricted Persons are prohibited from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor taking pursuant to this Section ~~1.1(g~~2(c), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Cooperation Agreement (Anywhere Real Estate Group LLC)

Standstill. Executive agrees that during the Standstill Period (as hereinafter defined): (a) ~~From and after the date hereof, the Investor~~ Executive will not, and will cause ~~each Investor Affiliate~~ his Affiliates (as hereinafter defined) not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchangehereinafter defined) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of ~~Issuer Common Stock pursuant to a tender~~ common stock or ~~exchange offer so long as such tender~~ common stock equivalents or ~~exchange offer (such tender or exchange offer meeting~~ the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is madeCorporation, in each case, ~~during~~ now or hereafter outstanding (collectively, “Securities”) without the ~~pendency~~ consent of the Corporation, if the effect of such ~~Permitted Offer,~~ acquisition would be to increase the ~~Minimum Condition; and (v) provides for consideration payable in cash,~~ aggregate Beneficial Ownership of Securities of Executive to greater than 4.99% of the total number of shares of Company common stock ~~or other securities of~~ then outstanding (the ~~Investor or a Subsidiary thereof, or a combination thereof~~“Percentage Limitation”); provided, ~~that, such consideration offered has, on a per share~~ that the foregoing limitation shall not apply to Executive’s acquisition of ~~Issuer Common Stock basis, a fair market value (as determined in good faith by~~ common stock pursuant to the ~~Investor’s board of directors) equal to or greater than the closing price~~ exercise of the ~~Issuer Common Stock on Nasdaq on~~ stock options granted to him or the ~~Trading Day immediately prior to the earlier~~ vesting of ~~(x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c)~~ any stock options, SARs, or equity he currently holds. In ~~the event the Investor Affiliates make a Permitted Offer~~addition, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor Executive will not, and will cause ~~each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate~~ his Affiliates not to, in make any ~~manner~~public announcement with respect to, ~~directly~~ or ~~indirectly:~~ submit any proposal for or with respect to (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the ~~extent otherwise specifically permitted by this Agreement, any~~ acquisition of ~~any Issuer Common Stock (or~~ Beneficial Ownership ~~thereof~~of any Securities if the effect of such acquisition would be to cause the Beneficial Ownership of Executive and his Affiliates to exceed the Percentage Limitation. For purposes of this Section, the term “Affiliates” shall have the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “Beneficial Ownership” shall be determined in accordance with Rule 13d-3 under the Exchange Act. (b) ~~or any material portion~~ Without the express prior written approval of the ~~assets~~ Board of ~~Issuer~~ Directors of the Corporation (the “Board”), Executive will not, and ~~its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does~~ will cause his Affiliates not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate into, directly or indirectly, ~~any~~ solicit proxies or initiate, propose or become a “participant” in a “solicitation~~” of “proxies~~” (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) ), in opposition to ~~vote,~~ any matter that has been recommended by a majority of the members of the Board or in favor of any matter that has not been approved by the Board or seek to ~~advise~~ advise, encourage or influence any ~~Person or entity~~ “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, “Person”) with respect to the voting ofof Securities in such manner, or initiate, or induce or attempt to induce any Person to initiate, any ~~Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related~~ shareholder proposal relating to the ~~Investor’s exercise~~ Corporation. (c) Without the express prior written approval of the Board, Executive will not, and will cause his Affiliates not to, join a consortium, partnership, limited partnership, syndicate or ~~enforcement~~ other “group” (within the meaning of ~~rights under~~ Section 13(d)(3) of the ~~Purchase Agreement~~Exchange Act), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, ~~in each case~~for the purpose of acquiring, ~~with respect to the Issuer Common Stock~~holding, voting or disposing of Securities, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and for any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action other purpose which would ~~or would reasonably be expected to force Issuer to make a public announcement regarding any~~ require disclosure under Item 4 of Schedule 13D adopted by the ~~types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest~~ Securities and Exchange Commission under the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~Exchange Act. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (fd) The ~~restrictions set forth in Section 1.1(d) (other than~~ “Standstill Period” shall commence on the ~~provisions~~ Date of ~~Section 1.1(d)(i))~~ Termination and shall ~~not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided~~terminate on December 31, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors2018. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Employment Separation Agreement (Banc of California, Inc.)

Standstill. The Investor and the Company agree that the one year period specified in the first sentence of Section 6 (aStandstill) ~~From~~ (the “Standstill”) of that certain Confidentiality Agreement by and ~~after~~ between the ~~date hereof,~~ Company and the Investor will ~~not~~expire on December 31, ~~and will cause each Investor Affiliate not to~~2008, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisitionand, the ~~Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions~~ Standstill will not ~~be applicable with respect~~ apply to ~~the acquisition~~ purchases by the Investor ~~Affiliates~~ of ~~Beneficial Ownership~~ Common Stock and any other securities or instruments convertible into or exchangeable for Common Stock to the extent such purchases result in the Investor having beneficial ownership (as determined in accordance with Rule 13d-3 under the Exchange Act) of ~~Issuer~~ less than 19.9% of the issued and outstanding shares of Common Stock (assuming for this purpose, full conversion of the Convertible Preferred Stock). In addition, the Standstill will automatically become inoperative and of no force or effect if (i) ~~pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of~~ any ~~stock splits, stock dividends~~ Person or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences “group” (within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) shall have acquired or entered into a definitive agreement to acquire more than 20% of the equity securities of the Company or assets of the Company or its subsidiaries representing more than 20% of the consolidated earning power of the Company and its subsidiaries (an “Issuer Sale Transaction”), (ii) a third party makes a tender offer for more than 20% of the equity securities of the Company (a “Third-Party Tender Offer”) and the Company files a Schedule 14D-9 with respect to such offer that does not recommend that the Company’s stockholders reject such offer, (iii) the Company effects a transaction, or ~~exchange offer which~~series of related transactions, involving the issuance of securities representing 15% or more (assuming the conversion of all convertible securities issued in such transaction or series of related transactions) of the pro-forma outstanding equity securities of the Company, unless the Investor is offered the opportunity to participate in, or does in fact participate in, such transaction and, such opportunity if ~~consummated,~~ accepted by the Investor would result in ~~such Person becoming~~ the ~~Beneficial Owner~~ Investor beneficially owning equity securities of ~~Issuer Common Stock (or other~~ the Company representing at least the same percentage of the outstanding equity ~~securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period,~~ securities of the ~~Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant~~ Company that it beneficially owned immediately prior to such ~~Third Party Offer~~transaction, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced “group” (within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) commences a solicitation of proxies or written consents to elect to the Board of Directors any individuals or slate of individuals in a contest with any individuals or slate of individuals whose nomination has been approved by ~~a third Person which, for~~ the ~~avoidance of doubt, is not an Investor Affiliate (~~Nominating and ~~not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party~~ Corporate Governance Committee (or ~~any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%~~its equivalent) of the ~~outstanding shares~~ Board of ~~Issuer Common Stock~~ Directors, or ~~thirty-five percent~~ (~~35%~~v) termination of the ~~voting power of~~ Rights Agreement or an increase in the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect triggering threshold thereunder to a ~~Change~~ percentage in excess of ~~Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and~~20%, in which case the percentage limitation in the first sentence of this Section 9(a) will be increased to 1/10% less than such ~~event~~revised triggering threshold. Notwithstanding the foregoing or any other provision of this Agreement, ~~such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of~~ the Investor ~~under Section 3.2, in the event that the Persons designated by the Investor~~ will not be required to ~~be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either~~ (x) ~~not appointed to~~ vote any shares or other voting equity securities of the Company that it beneficially owns in favor of, or provide a consent or proxy approving, any Issuer ~~Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting~~ Sale Transaction, or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect tender any equity securities of the ~~Issuer or any material Subsidiary or its debts, or of~~ Company in response to a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsThird-Party Tender Offer. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investment Agreement (Guaranty Financial Group Inc.)

Standstill. In consideration of having access to Confidential Information of Targanta, Company agrees that, until December 31, 2008 (~~a) From and after~~ the ~~date hereof~~“Standstill Term”), ~~the Investor~~ Company will not~~, and will cause each Investor Affiliate not to~~, directly or indirectly, ~~acquire Beneficial Ownership~~ without the prior approval of ~~shares~~ the Board of ~~Issuer Common Stock, including for purposes~~ Directors of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock Targanta (i) ~~pursuant~~ acquire or make any proposal to ~~the Purchase Agreement (unless, for the avoidance~~ acquire greater than an aggregate of ~~doubt, the representation~~ 1% of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~securities or property of Targanta, (ii) propose to enter into any merger or Business Combination (as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuerdefined below) ~~as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement~~involving Targanta, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in ~~or in~~ any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition solicitation of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) proxies to vote, or seek to advise or influence any ~~Person or entity~~ person with respect to the voting ~~of,~~ of any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members securities of the ~~Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against~~Targanta, (xiv) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or ~~in any way~~ participate in a ~~13D Group or otherwise act in concert with any Person, in each case,~~ “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to ~~the Issuer Common Stock~~any voting securities of Targanta, ~~or seek, propose or~~ (v) otherwise act ~~alone~~ or ~~in concert with others,~~ seek to control or influence ~~or control Issuer’s~~ the management, Board of Directors or policies of Targanta, (vi) disclose any intention, plan or arrangement inconsistent with the ~~Issuer Board~~ foregoing or ~~policies, except that this subsection does not restrict~~ (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (ivvii) take any action which ~~would or would reasonably be expected to force Issuer~~ might require Targanta to make a public announcement regarding the possibility of a Business Combination or merger. Except as provided above, Company also agrees during such period not to request Targanta (or its directors, officers, employees, agents or representatives) to amend or waive any provision of this paragraph. For purposes of clarity it is understood that the ~~types of matters set forth~~ term “Company” includes the party signing as the Company under this Agreement and any and all entities that, directly or indirectly, control such party or are controlled by such party or are under common control with such party. The limitations provided in ~~clause (i) above; (v) bring any action, or otherwise act, to contest~~ the ~~validity~~ first paragraph of this Section ~~1.1(d); or~~ entitled “Standstill” (vithe “Standstill Provision”) ~~enter into~~ shall cease to apply (a) if at any ~~discussions or arrangements with~~ time when Targanta is subject to the public reporting requirements of the Securities Exchange Act of 1934 on account of its common stock being registered under Section 12 thereof, any third party ~~with respect to~~ who is not a member of a group (as defined in Rule 13-d-5 of the Securities Exchange Act of 1934) of which Company or any of ~~the foregoing~~ Company’s controlled affiliates are members (~~except as otherwise expressly provided herein). (e~~a “Third Party”) ~~Unless earlier terminated~~ shall acquire beneficial ownership of 10% or ~~made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration~~ more of the ~~Restricted Period. For~~ combined voting power of the ~~avoidance~~ then outstanding voting securities of ~~doubt~~Targanta, ~~any tolling~~ unless such securities are acquired or to be acquired by such third party in the ordinary course of ~~such restrictions pursuant to Section 1.1(f) will~~ business and are not ~~result~~ acquired for the purpose of and do not have the effect of changing or influencing the control of Targanta nor in connection with or as a participant in any ~~extension of the period referred to in the previous sentence.~~ transaction having such purpose or effect; (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (ib) in the event ~~that~~ of the commencement by any person, entity or group of a tender ~~offer~~ or exchange offer ~~for at least thirty-five percent (35%)~~ seeking to acquire beneficial ownership of all or any of the ~~Issuer Common Stock~~ outstanding shares of voting securities of Targanta and continuing until 120 days after such offer is ~~commenced~~ terminated or expires; (~~within~~ c) from and after the ~~meaning~~ execution of ~~Section 14(d) of the Exchange Act) by~~ a ~~third Person~~ definitive agreement which~~, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer~~, if consummated, would result in ~~such third party~~ a Business Combination; (d) from and after the 15th day following the filing of a preliminary proxy statement by any Third Party with respect to the commencement of a bona fide proxy or consent solicitation subject to Section 14 of the Securities Exchange Act of 1934 to elect or remove a majority of the directors of Targanta which, if successful, would result in a change in the composition of a majority of the Board of Directors of Targanta; (e) in the event the Board of Directors of Targanta adopts a plan of liquidation or dissolution; or (f) a Business Combination that directly results in a shift of direct and indirect majority voting control from the public stockholders of Targanta to a single stockholder or “group” (as defined in Rule 13d-5 under the Securities Exchange Act of 1934) of stockholders. For the purposes of this Section, “Business Combination” means any merger, consolidation, sale, transfer or other disposition of all or substantially all of the assets of Targanta or its affiliates, or other similar extraordinary transaction to which Targanta or any ~~13D Group~~ of ~~which such third party~~ its affiliates is a ~~member) becoming~~ party unless, following such transaction or transactions, the ~~Beneficial Owner of securities representing greater than either thirty-five percent (35%)~~ individuals and entities who were the beneficial owners of the outstanding ~~shares~~ voting securities of ~~Issuer Common Stock~~ Targanta or ~~thirty-five percent (35%)~~ such affiliate immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the ~~Issuer, and either (1)~~ then outstanding voting securities entitled to vote generally in the ~~Issuer Board recommends that the stockholders~~ election of directors or similar governing persons of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization corporation or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any entity resulting from such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorstransaction. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Mutual Confidential Disclosure Agreement (Medicines Co /De)

Standstill. (a) ~~From~~ Each Purchaser covenants to and ~~after~~ agrees with the ~~date hereof~~Company that, without the ~~Investor will not~~Company’s prior written consent, ~~and will cause each Investor Affiliate not to~~neither such Purchaser nor any of its Affiliates will, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership indirectly until the date that ~~derive their value~~ is ninety (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (1090) days ~~following~~ after the ~~date any Third Party commences~~ Closing Date (~~within~~ the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted OfferStandstill Period”): (i) ~~is commenced and made~~ in ~~accordance with the applicable rules and regulations under the Exchange Act applicable~~ any way acquire, offer or propose to ~~tender~~ acquire or ~~exchange offers, including, if applicable, Section 13(e)-3~~ agree to acquire legal title to or Beneficial Ownership of ~~the Exchange Act and the related rules and regulations applicable thereto~~any Company Securities; (ii) is make any public announcement with respect to, or submit to the Company or any of its directors, officers, representatives, trustees, employees, attorneys, advisors, agents or Affiliates, any proposal for the acquisition of any Company Securities or with respect to any merger, consolidation, business combination, restructuring, recapitalization or purchase of any substantial portion of the assets of the Company of any of its Subsidiaries, in which such Purchaser and its Affiliates are involved, and whether or not such proposal might require the making of a public announcement by the Company unless the Company shall have made a prior written request to ~~all holders of Issuer Common Stock~~such Purchaser to submit such a proposal; (iii) ~~will expire no earlier than midnight~~seek or propose to influence, ~~New York City time~~advise, on change or control the ~~twentieth (20th) business day following~~ management, the ~~commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation~~ board of directors of the ~~Investor Affiliates to purchase Issuer Common Stock; provided~~Company, ~~that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced~~ governing instruments or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority policies or affairs of the ~~outstanding shares~~ Company by way of ~~Issuer Common Stock outstanding at~~ any public communication or communication with any Person other than the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereofCompany, or ~~a combination thereof; provided~~make, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way ~~assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or~~ participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined ~~under~~ or used in Regulation 14A under the Exchange Act) to ~~vote,~~ vote any Company Securities or ~~seek to advise or influence~~ become a “participant” in any ~~Person or entity~~ “election contest” as such terms are defined and used in Rule 14a-11 under the Exchange Act) with respect to ~~the voting of~~Company Securities; provided, ~~any Issuer Common Stock~~ however, that nothing in this clause (iii) shall prevent such Purchaser or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor its Affiliates from ~~opposing publicly or privately, or voting against or encouraging others to vote against,~~ (x) voting in any ~~proposal of a third party regarding a merger~~ manner any Company Securities over which such Purchaser or ~~other business combination involving the Issuer or any Subsidiary thereof~~ such Affiliates has Beneficial Ownership or (y) ~~other similar corporate transaction on which a vote~~ communicating privately with shareholders of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect Company to the ~~Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection~~ extent such communication does not ~~restrict (x) the Investor Directors from participating as members~~ constitute a “solicitation” of ~~the Issuer Board and any committees thereof in their capacity~~ “proxies,” as such terms are defined or used in Regulation 14A under the Exchange Act and the number of persons with whom such Purchaser communicates is fewer than ten (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d10); or (viiv) ~~enter into~~ make a request to amend or waive any ~~discussions or arrangements with any third party~~ provision of this Section 5.5(a). Notwithstanding the above provisions under this Section 5.5(a), with respect to each case under items (i) – (iii) above, if at any time the Company issues any Company Securities (except for any Company Securities issued or granted pursuant to the employee share incentive plan of the ~~foregoing~~ Company existing as of the date hereof (~~except~~ but such exception shall not apply to any future amendments which may be made to such plan)) or sells any treasury ADSs, each Purchaser shall have the right to acquire such number of Company Securities in order to maintain the same percentage ownership it owns in the Company prior to such issuance or sale of such Company Securities or treasury ADSs (as ~~otherwise expressly provided herein~~applicable) (on a fully diluted and as converted basis as defined in the Exhibit C). (eb) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) purposes of this ~~Section 1.1(f) has occurred and resulted~~ Agreement, a Person shall be deemed to have “Beneficial Ownership” of any securities in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group respect of which such ~~third party~~ Person or any such Person’s Affiliates is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor considered to be ~~elected or appointed to~~ a “Beneficial Owner” under Rule 13d-3 under the ~~Issuer Board~~ Exchange Act as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect ~~or (y)~~ on the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsdate hereof. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Subscription Agreement (Bitauto Holdings LTD)

Standstill. (a) From the Closing until Company Parent (together with its Affiliates) Beneficially Owns Acquiror Securities representing less than 5% of the Acquiror Voting Power, Company Parent covenants and ~~after~~ agrees that, without the ~~date hereof~~prior written consent of Acquiror or its Board of Directors, ~~the Investor~~ Company Parent will not, and will not cause ~~each Investor Affiliate not to~~or permit any of its controlled Affiliates, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”):to: (i) ~~is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable~~ acquire, offer to ~~tender~~ acquire, or ~~exchange offers~~agree to acquire, ~~including~~by purchase or otherwise, ~~if applicable, Section 13(e)-3~~ Beneficial Ownership of Acquiror Securities representing more than 40% of the ~~Exchange Act and the related rules and regulations applicable thereto~~Acquiror Voting Power; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or ~~participate in, directly~~ join or ~~indirectly,~~ become a participant in any “solicitation” of “proxies” (as such terms are defined ~~under~~ in Regulation 14A ~~under~~ as promulgated by the ~~Exchange Act~~SEC) from holders of Acquiror Securities; provided, that Company Parent’s mere factual disclosure, in response to ~~vote~~a bona fide third party request for such information, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the ~~Issuer Board and any committees thereof~~ manner in ~~their capacity as such~~ which it has voted or ~~(B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others~~ intends to vote ~~against, (x)~~ any ~~proposal~~ Acquiror Securities shall not be deemed to be in violation of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesthis Section 5.20(a)(ii); (iii) ~~call~~ form, join, or ~~seek~~ knowingly participate in a Group (other than with Company Parent’s Affiliates) in connection with the voting of Acquiror Securities; or (iv) nominate or cause to ~~call~~ be nominated any persons for election to Xxxxxxxx’s Board of Directors other than pursuant to Company Parent’s rights set forth in the A&R Stockholders Agreement. (b) Notwithstanding the foregoing, Section 5.20(a) shall not prohibit, restrict, hinder, limit or impede any of the following: (i) the submission of one or more confidential proposals for a potential negotiated transaction to the Chief Executive Officer of Acquiror (or other individual(s) specifically designated in writing by the Chief Executive Officer of Acquiror) or the Acquiror’s Board of Directors so long as such confidential proposals are made in a manner that would not reasonably be expected to require Company Parent or Acquiror to make any public announcement regarding any such proposal(s), unless and until such proposal is approved by the Acquiror’s Board of Directors; (ii) the exercise of Company Parent’s rights or performance of any obligations under this Agreement, the A&R Charter, the A&R Bylaws, the A&R Stockholders Agreement, or the A&R Registration Rights Agreement, including bringing any claim to enforce its rights thereunder or defending itself from any claim thereunder; (iii) any action, omission or statement or other communication by a Xxxxx-Xxxxxx Designee (as defined the A&R Stockholders Agreement) in a meeting of ~~Issuer~~the Acquiror’s ~~stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join~~ Board of Directors or in ~~any way participate in a 13D Group~~ discussions or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as deliberations among members of the ~~Issuer~~ Acquiror’s Board ~~and any committees thereof~~ of Directors, solely in ~~their~~ his or her capacity as ~~such and (y)~~ a member of the ~~Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B)~~Acquiror’s Board of Directors; (iv) ~~take any action which would~~ acquisitions made on a pro rata basis (based on economic ownership) as a result of a stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or ~~would reasonably be expected to force Issuer to make a public announcement regarding any~~ other like change approved by the Acquiror’s Board of ~~the types of matters set forth in clause (i) above~~Directors; (v) ~~bring any action, or otherwise act,~~ acquisitions as a result of the exercise of Company Parent’s preemptive rights pursuant to ~~contest the validity of this~~ Section ~~1.1(d); or~~5.22; (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) acquisitions (other than acquisitions consummated with the ~~provisions of~~ intent to circumvent the restrictions in Section ~~1.1(d)(i~~5.20(a)) ~~will terminate upon~~ as a result of Company Parent or any of its controlled Affiliates acquiring equity interests in a previously unaffiliated Person that Beneficially Owns Acquiror Securities at the ~~expiration~~ time of the ~~Restricted Period. For the avoidance of doubt, any tolling~~ consummation of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (providedacquisition, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is consummated for a bona fide business purpose (and not ~~being actively pursued at such time,~~ for the ~~restrictions~~ purpose of utilizing the exception set forth in this Section ~~1.1(d~~5.20(b)(vi)); (vii) acquisitions (other than acquisitions consummated with the intent to circumvent the restrictions in Section 5.20(a)) by any mutual fund, pension trust, hedge fund, private equity fund or other investment vehicle in which Company Parent or any of its controlled Affiliates holds an interest, but which is not controlled or advised by Company Parent or its controlled Affiliates; (viii) any statement or other communication to the extent necessary to comply with applicable Law or any subpoena or other legal process or to respond to a request for information from any Governmental Authority, self-regulatory body or securities exchange with jurisdiction over such Person from whom information is sought; (ix) any statement or other communication regarding Acquiror by Company Parent to its or its controlled Affiliates’ investors, potential investors or Representatives; provided that any such communications are subject to reasonable confidentiality obligations of such investors or Representatives; (x) granting any liens or encumbrances on any claims or interests in favor of a bank or broker-dealer or prime broker holding such claims or interests in custody or prime brokerage agreements or depositing (or withdrawing from deposit) any Acquiror Securities with a fiduciary or depositary pursuant to a deposit agreement or arrangements (including any prime broker account); (xi) soliciting quotes or bids from brokers, market makers or similar Persons in connection with pricing any Acquiror Securities or other valuation confirmations; (xii) subject to compliance with applicable securities laws, negotiating, evaluating or trading, directly or indirectly, in any index, exchange traded fund, benchmark or other basket of securities which may include, or otherwise reflect the performance of, any Acquiror Securities; (xiii) participation on the same basis as other stockholders of Acquiror in any tender or exchange offer, consolidation, business combination, acquisition, merger, Change of Control or similar extraordinary transaction involving Acquiror or any sale of all or a substantial portion of the assets of Acquiror initiated by a third party (provided that any “solicitation” of “proxies” or any public announcement with respect to such transaction shall be governed by Section 5.20(a)); (xiv) the receipt, in and of itself, by Company Parent or any of its controlled Affiliates of any unsolicited inquiries or indications of interest (provided any response thereto shall be governed by Section 5.20(a)); or (xv) Company Parent or any of its controlled Affiliates taking action specifically invited in writing by the Acquiror’s Board of Directors. (c) The prohibitions in Section 5.20(a) shall ~~thereafter resume~~ immediately terminate, and ~~continue to apply~~ Company Parent may engage in ~~accordance with their terms~~any of the activities specified in Section 5.20(a), ~~until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)):~~in the event that: (i) ~~in the event that~~ Acquiror enters into a definitive written agreement providing for a Change of Control; (ii) (A) any Person or Group (other than Company Parent or any of its Affiliates) commences a tender offer, exchange offer or ~~exchange~~ other similar offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offerthat, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control ~~Transaction,~~ of Acquiror and (B) the Board of Directors of Acquiror either (x) publicly recommends that Acquiror consummate such transaction or ~~the Issuer makes a public announcement that it is seeking to sell itself and, in~~ (y) does not publicly recommend against such ~~event, such announcement is made with the approval~~ transaction within 10 Business Days of the ~~Issuer Board~~public commencement of such tender offer, exchange offer or other similar offer; (iii) ~~subject to the obligations~~ a Change of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer Control otherwise ~~breaches its obligations under Article 3;~~occurs; or (iv) ~~the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary~~ Acquiror files for, or becomes subject to a proceeding ~~shall be commenced or an involuntary petition shall be filed seeking (x)~~ for, bankruptcy, reorganization, liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership dissolution or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsprocess. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Merger Agreement (Duckhorn Portfolio, Inc.)

Standstill. During the Standstill Term neither the Investor nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~Stock and/or Common Stock Equivalents; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 3.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership~~ shares constituting Shares of ~~Issuer~~ Then Outstanding Common Stock ~~(i) pursuant to~~ is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of (i) the participation in any ~~stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available~~ offering by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) Company of any ~~rights distributed by the Issuer pursuant to clause~~ securities or (ii) ~~above~~a repurchase by the Company of Shares of Then Outstanding Common Stock, a stock split, a stock dividend or a recapitalization of the Company, the Standstill Parties shall not be required to dispose of any of their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership increasing; (ivb) ~~in accordance with a Permitted Offer~~ directly or ~~(v) which~~ indirectly, seek to have called any meeting of the stockholders of the Company, propose or nominate for election to the Company’s Board of Directors any person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at~~ Directors or cause to be voted any ~~time following the earlier~~ Shares of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Then Outstanding Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in ~~respect~~ favor of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror~~ person for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as election to the ~~terms~~ Company’s Board of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretoDirectors; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any~~ solicit proxies or consents or become a “participant” in a “solicitation~~” of “proxies~~” (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) without the prior written consent of, or in opposition to ~~vote~~the recommendation of, the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (d) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; (e) publicly propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~Issuer Common Stock~~ recapitalization, restructuring, liquidation or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~f) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (e) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group~~ “partnership, limited partnership, syndicate, or ~~otherwise act in concert~~ other group” within the meaning of Section 13(d)(3) of the Exchange Act; or (g) enter into discussions, negotiations, arrangements or agreements with any ~~Person, in each case, with respect~~ Third Party relating to the ~~Issuer Common Stock~~foregoing actions referred to in (a) through (e) above; provided, ~~or seek~~however, ~~propose or otherwise act alone or~~ that (A) nothing contained in ~~concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that~~ this ~~subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y)~~ Section 3.1 shall prohibit the Investor from ~~joining~~ making confidential, non-public proposals to, or ~~in any way participating in a 13D Group~~ entering into confidential, non-public discussions, negotiations, arrangements or ~~otherwise acting in concert~~ agreements with, the Company and with ~~any Person~~Third Parties with the express prior authorization of the Company (provided that no such proposals, ~~in each case~~discussions, ~~to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would~~ negotiations, arrangements or agreements would reasonably be expected to ~~force Issuer~~ require the Company or any Third Party to ~~make~~ be required to publicly disclose the same), which the Investor or any Affiliate may request in a confidential, non-public ~~announcement~~ manner, regarding ~~any~~ a transaction or matter of the ~~types~~ type described in the foregoing clauses (a) through (f); (B) nothing in the foregoing clause (b) shall prohibit the Investor from inquiring of ~~matters~~ the Company’s Nominating and Corporate Governance Committee (and not pursuant to the advance notice provisions set forth in ~~clause~~ the Company’s bylaws), in a confidential, non-public manner, whether the Company would be interested in receiving potential director candidates for consideration by the Company’s Nominating and Corporate Governance Committee, which candidates the Investor believes would be in the best interest of the Company and its stockholders; and (iC) ~~above; (v) bring~~ nothing contained in this Section 3.1 prohibits the Investor or its Affiliates from acquiring a company or business that owns Shares of Then Outstanding Common Stock and/or Common Stock Equivalents provided that any ~~action, or otherwise act,~~ such securities of the Company so acquired will be subject to ~~contest~~ the ~~validity~~ provisions of this Section ~~1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~3. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investor Agreement (Tracon Pharmaceuticals, Inc.)

Standstill. (a) ~~From and after~~ Purchaser agrees that until the ~~date hereof~~second anniversary of the Closing Date, without the ~~Investor will not~~prior written approval of the Independent Common Directors, ~~and will cause each Investor Affiliate not to~~none of Purchaser or any of its Affiliates will, directly or ~~indirectly~~indirectly in any way, acquire, offer or propose to acquire or agree to acquire, Beneficial Ownership of any Common Stock of the Company if such acquisition would result in Purchaser or its Affiliates having Beneficial Ownership of 49.9% or more of the outstanding shares of ~~Issuer~~ Common ~~Stock~~Stock of the Company. (b) Purchaser agrees that from the second anniversary of the Closing Date through the third anniversary of the Closing Date, ~~including for purposes~~ without the prior written approval of ~~this Section 1.1(a)~~the Independent Common Directors, ~~rights~~none of Purchaser or any of its Affiliates will, ~~options~~ directly or ~~other derivative securities~~ indirectly in any way, acquire, offer or ~~contracts~~ propose to acquire or ~~instruments~~ agree to acquire, Beneficial Ownership of any outstanding shares of Common Stock of the Company if such acquisition would result in Purchaser or its Affiliates having Beneficial Ownership of 49.9% or more of the outstanding shares of Common Stock of the Company, unless such acquisition or offer or agreement to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock ~~(i)~~ is made pursuant to ~~the Purchase Agreement~~ a Permitted Tender Offer (~~unless,~~ for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the ~~number~~ Beneficial Ownership of ~~outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition~~Purchaser and its Affiliates hereunder, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) any security that is convertible into, or exercisable for, any Common Stock that is Beneficially Owned by Purchaser or its Affiliates shall be treated as fully converted or exercised, as the ~~public announcement of such Permitted Offer~~ case may be, into the underlying Common Stock and (y) ~~commencement of such Permitted Offer~~Common Stock and securities convertible into, or exercisable for, Common Stock, that are Beneficially Owned by Purchaser and its Affiliates shall be aggregated). (c) In Except to the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or extent expressly permitted by ~~Sections 1.1(b~~Section 4.1(a) or (b), ~~(e)~~Purchaser agrees that until the third anniversary of the Closing Date, ~~(f)~~without the prior written approval of the Independent Common Directors, ~~(g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf~~ none of ~~Investor~~ Purchaser or any ~~Investor Affiliate not to, in any manner~~of its Affiliates will, directly or indirectly: (i1) enter into or agree, ~~effect~~ offer, propose or ~~seek, offer or propose~~ seek (~~whether~~ either publicly or ~~otherwise) to effect~~privately, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the ~~extent~~ Board of Directors or the Independent Common Directors in a manner that does not require the Company to publicly disclose) to enter into, or otherwise ~~specifically permitted by this Agreement~~be involved in or part of, any acquisition ~~of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer~~transaction, merger or other business combination ~~involving Issuer~~ relating to all or part of the Company or any of ~~its~~ the Company Subsidiaries ~~(provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer~~ or any acquisition transaction for all or part of the assets of the Company or any Company Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of ~~its Subsidiaries~~their respective businesses; (ii2) ~~except as provided~~ make, or in ~~Article 3, make or~~ any way participate in~~, directly or indirectly~~, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder (the “Exchange Act”) disregarding clause (iv) of Rule 14a-1(2) and including any otherwise exempt solicitation pursuant to Rule 14a-2(b)) to vote, or seek to advise or influence any ~~Person~~ person or entity with respect to the voting of, any ~~Issuer Common Stock~~ voting securities of the Company or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except Company Subsidiary; provided that this subsection ~~does~~ shall not be deemed to restrict (Ax) the ~~Investor~~ Preferred Stock Directors from participating as members of the ~~Issuer~~ Board of Directors and any committees thereof in their capacity as such or (By) ~~the Investor Affiliates~~ any Liberty Party from opposing publicly or privately, or voting against or and encouraging others to vote ~~against, (x)~~ against any proposal of a third party regarding a merger or other business ~~combination involving~~ combination, or opposing publicly or privately any tender or exchange offer, regardless of whether such proposal or offer is supported by the ~~Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ Board of ~~the Issuer’s stockholders is required under Delaware Law or Nasdaq rules~~Directors; (~~iii~~3) call or seek to call a meeting of ~~Issuer’s~~ the stockholders of the Company or any of the Company Subsidiaries or initiate any stockholder proposal for action by ~~Issuer’s stockholders~~stockholders of the Company or any of the Company Subsidiaries, form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person, in each case,~~ “group” (within the meaning of Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder) with respect to any voting securities of the ~~Issuer Common Stock~~Company, or seek, propose or otherwise act alone or in concert with others, to influence or control ~~Issuer’s~~ the management, board of directors or policies of the ~~Issuer Board~~ Company or ~~policies, except~~ any Company Subsidiaries; provided that this subsection ~~does~~ shall not be deemed to restrict ~~(x)~~ the ~~Investor~~ Preferred Stock Directors from participating as members of the ~~Issuer~~ Board of Directors and any committees thereof in their capacity as ~~such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B);~~such; or (~~iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v~~4) bring any ~~action,~~ action or otherwise ~~act,~~ act to contest the validity of this Section ~~1.1(d); or~~4.1 or seek a release of the restrictions contained herein, or make a public request to amend or waive any provision of this Section 4.1. (vid) ~~enter into any discussions or arrangements with any third party with respect~~ The provisions of Section 4.1(a), (b), and (c), and Section 4.2, shall terminate immediately and automatically upon the first to occur of any of the ~~foregoing (except as otherwise expressly provided herein).~~foregoing: (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (xi) liquidation, reorganization or other relief in respect of the ~~Issuer~~ Company or any material Subsidiary or its debts, or of a substantial part of its assets, under any ~~federal~~Federal, state or foreign bankruptcy, insolvency, receivership or similar ~~Law~~ law now or hereafter in effect or (yii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the ~~Issuer~~ Company or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for ~~sixty (60)~~ 60 days or an order or decree approving or ordering any of the foregoing shall be entered~~; or~~; (~~vii~~2) the ~~Issuer~~ Company or any material Subsidiary shall (Ai) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any ~~federal~~Federal, state or foreign bankruptcy, insolvency, receivership or similar ~~Law~~ law now or hereafter in effect, (Bii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A1) above, (Ciii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the ~~Issuer~~ Company or any material Subsidiary or for a substantial part of its assets, (Div) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (Ev) make a general assignment for the benefit of creditors; (3) any proposal relating to a merger or other transaction, pursuant to which Purchaser or any of its Affiliates would acquire majority control of the Company, shall be submitted to a vote of the holders of Common Stock of the Company pursuant to Section 4.1(a), (b) or (c) with the prior written approval of the Independent Common Directors, and such proposal shall have received the affirmative vote of a majority of the shares of Common Stock outstanding immediately prior to the commencement of such Permitted Tender Offer and not owned by Purchaser or any of its Affiliates; or (4) after the second anniversary of the Closing Date, the Purchaser shall consummate the purchase of shares of Common Stock tendered pursuant to a Permitted Tender Offer in compliance with Section 4.1(b), if the number of shares tendered in such Permitted Tender Offer constituted a majority of the shares of Common Stock outstanding immediately prior to the commencement of such Permitted Tender Offer and not owned by Purchaser or any of its Affiliates. (ge) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change For purposes of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.this Agreement,

Appears in 1 contract

Samples: Investment Agreement (Sirius Xm Radio Inc.)

Standstill. (a) From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for For purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisitionAgreement, the ~~Investor~~“Standstill Period” shall mean the period from the date of this Agreement until the later of (x) the conclusion of the Company’s ~~Investor Percentage Interest would exceed~~ 2013 annual meeting of stockholders (the ~~Cap~~“2013 Annual Meeting”) and (y) such time as none of the Third Point Nominees are members of the Board; provided, however, that ~~such restriction on acquisitions will~~ if the Board does not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation nominate each of the ~~Investor in Section 4.2(d) hereof is not true and correct),~~ Third Point Nominees at the 2013 Annual Meeting or any subsequent annual meeting of the stockholders of the Company (~~ii)~~ other than as a result of such Third Point Nominee(s)’ refusing or declining to serve as a nominee), the Standstill Period shall expire at such time as any ~~stock splits~~of the Third Point Nominees are not so nominated provided, ~~stock dividends or other distributions or recapitalizations or similar offerings made generally available by~~ further, that if the ~~Issuer or any Subsidiary thereof to holders~~ advance notice deadline for nominations of ~~Issuer Common Stock~~ directors at such upcoming annual meeting of the stockholders of the Company has passed (or ~~other equity securities~~ there remains less than 10 days from the time the Third Point Nominees are notified that any of ~~the Issuer~~them have not been so nominated until such advance notice deadline), ~~including rights offerings~~ the Board shall take all appropriate action to (i) provide the Third Point Group with a 10-day period from the time the Third Point Nominees are notified that any of them have not been so nominated to comply with the advance notice provisions for nominations of directors contained in the Bylaws at such upcoming annual meeting and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) cause such upcoming annual meeting not to be held prior to 90 days following the ~~date any~~ time the Third ~~Party commences (within~~ Point Nominees are notified they have not been so nominated. During the ~~meaning of Section 14(d)~~ Standstill Period, each member of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will Point Group shall not, and ~~will~~ shall cause each ~~Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor~~ Third Point Affiliate not to, in take any ~~manner~~of the following actions, directly or indirectly: a. solicit proxies or written consents of stockholders, or any other person with the right to vote or power to give or withhold consent in respect of Voting Securities, or conduct, encourage, participate or engage in any other type of referendum (ibinding or non-binding) ~~enter into~~ with respect to, or ~~agree~~from the holders of Voting Securities or any other person with the right to vote or power to give or withhold consent in respect of Voting Securities, make, or in any way participate or engage in (other than by voting its Voting Securities in a manner that does not violate this Agreement), any “solicitation” of any proxy, consent or other authority to vote any Voting Securities or make any shareholder proposal (whether pursuant to Rule 14a-8 promulgated under the Exchange Act or otherwise), with respect to any matter, or become a participant in any contested solicitation with respect to the Company, including without limitation relating to the removal or the election of directors; b. form or join in a partnership, limited partnership, syndicate or other group, including without limitation a group as defined under Section 13(d) of the Exchange Act, with respect to the Common Stock or any other Voting Securities, or otherwise support or participate in any effort by a third party with respect to the matters set forth in Section 3)c, or deposit any shares of Common Stock or any other Voting Securities in a voting trust or subject any shares of Common Stock or any other Voting Securities to any voting agreement, other than solely with other members of the Third Point Group or other Third Point Affiliates with respect to the shares of Common Stock now or hereafter owned by them or pursuant to this Agreement; c. without the prior approval of the Board contained in a written resolution of the Board, (x) either directly or indirectly for itself or its Affiliates, or in conjunction with any other person or entity in which it is or proposes to be either a principal, partner or financing source or is acting or proposes to act as broker or agent for compensation, effect or seek, offer or propose (whether publicly or otherwise) to effect, or ~~announce any intention to effect or~~ cause or participate in, or (y) except as set forth in or the next sentence, in any way ~~assist~~knowingly support, assist or facilitate ~~or encourage~~ any other ~~Person~~ person to effect or seek, offer or propose ~~(whether publicly~~ to effect, or ~~otherwise) to effect~~ cause or participate in~~: (A) except to the extent otherwise specifically permitted by this Agreement~~, any ~~acquisition of any Issuer Common Stock~~ (~~or Beneficial Ownership thereof~~i) ~~or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any~~ tender offer or exchange offer, ~~merger or other business combination involving Issuer or any of its Subsidiaries (provided~~merger, ~~that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger~~ acquisition or other business combination involving the ~~Issuer~~ Company or any ~~Subsidiary thereof~~ of its subsidiaries or affiliates; (ii) form of business combination or acquisition or other transaction relating to a material amount of assets or securities of the Company or any of its subsidiaries or affiliates or (yiii) ~~Transferring any shares~~ form of ~~Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization,~~ restructuring, ~~liquidation, dissolution~~ recapitalization or ~~other extraordinary~~ similar transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries; (ii) except as provided~~ subsidiaries or affiliates. Notwithstanding the foregoing, nothing in ~~Article 3, make~~ this Section 3)c. shall prohibit any member of the Third Point Group or ~~participate in, directly~~ any Third Point Affiliate from engaging in private discussions with third parties regarding a potential transaction to be proposed by such third party or ~~indirectly,~~ presenting any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect~~ potential transaction to the ~~voting of, any Issuer Common Stock or any demand for~~ Board on a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Personprivate basis, in each case, ~~with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or~~ in ~~concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except~~ circumstances that ~~this subsection does~~ would not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to ~~force Issuer to make a~~ require public ~~announcement regarding~~ disclosure by the Company or any member of the ~~types~~ Third Point Group or any Third Point Affiliate, in each case at or around the time the proposal is made; d. make, or cause to be made, any statement or announcement that relates to and constitutes an ad hominem attack on, or relates to and otherwise disparages, the Company, its officers or its directors or any person who has served as an officer or director of ~~matters set forth~~ the Company in ~~clause~~ the past, or who serves on or following the date of this Agreement as an officer or director of the Company: (i) ~~above;~~ in any document or report filed with or furnished to the SEC or any other governmental agency, (vii) ~~bring~~ in any ~~action~~press release or other publicly available format, or ~~otherwise act~~(iii) to any analyst, ~~to contest~~ journalist or member of the ~~validity of this Section 1.1(d~~media (including without limitation, in a television, radio, newspaper or magazine interview); or ~~(vi) enter into~~ e. as a result of acquiring beneficial ownership of any ~~discussions or arrangements with any third party with respect to any~~ Voting Securities of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~Company, ~~the provisions~~ become a beneficial owner of ~~Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration~~ any Voting Securities of the ~~Restricted Period. For the avoidance~~ Company which, together with all other Voting Securities of ~~doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension~~ which members of the ~~period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (~~Third Point Group and the ~~Investor will~~ Third Point Affiliates are beneficial owners, would be ~~permitted~~ deemed under Rule 13d-3(c) promulgated under the Exchange Act to ~~take the actions otherwise prohibited thereunder) if any~~ constitute a number of shares of Common Stock in excess of 10% of the ~~following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred~~ issued and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of ~~Issuer~~ Common Stock ~~or thirty-five percent (35%)~~ of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsCompany. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Third Point LLC)

Standstill. During the Standstill Term, neither the Investor nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will~~ notwithstanding the provisions of this Section 3.1(a), if the number of shares constituting Shares of Then Outstanding Common Stock is reduced or if the aggregate ownership of the Standstill Parties is increased as a result of a repurchase by the Company of Shares of Then Outstanding Common Stock, stock split, stock dividend or a recapitalization of the Company, the Standstill Parties shall not be ~~applicable with respect~~ required to ~~the acquisition by the Investor Affiliates~~ dispose of ~~Beneficial Ownership~~ any of ~~Issuer~~ their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934. (b) directly or indirectly, (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company, (ii) ~~as a result~~ propose or nominate for election to the Company’s Board of Directors any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~ Company’s Board of Directors (bexcluding the Designated Director, if any) ~~Notwithstanding~~ or (iii) unless a person referred to in the foregoing clause (ii) is nominated by a third party in connection with such party’s publicly announced and not withdrawn Acquisition Proposal (in which case the provisions of Section ~~1.1(a~~5.1 shall apply to permit the Standstill Parties to either vote in accordance with the recommendation of the Company’s Board of Directors or in the same proportion as the votes cast by all other holders of all classes of voting securities of the Company), at fail to cause to be voted in accordance with the recommendation of the Company’s Board of Directors with respect to such person for election to the Company’s Board of Directors any ~~time following~~ Shares of Then Outstanding Common Stock; (c) directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) the ~~earlier~~ consummation of which would result in a Change of Control of the Company (~~x) ten~~ an “Acquisition Proposal”); provided, however, that from and after the filing of a Schedule 14D-9 (~~10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange offer which, if consummated, would result in such Person becoming~~ by the ~~Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (~~Company recommending that stockholders accept any such offer, ~~a “Third Party Offer”), unless during such ten (10~~Investor shall not be prohibited from taking any of the actions otherwise prohibited by this Section 3.1(c) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as the Company maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; (f) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~Issuer Common Stock~~ recapitalization, restructuring, liquidation or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (f) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (iih) enter into discussions, negotiations, arrangements or agreements with any Person relating to the ~~Issuer solicits from one~~ foregoing actions referred to in (a) through (g) above; or ~~more Persons~~CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934. (i) request or propose to the Company’s Board of Directors, any member(s) thereof or any officer of the Company that the Company amend, waive, or ~~enters into substantive discussions with one~~ consider the amendment or ~~more Persons regarding~~waiver of, ~~a proposal with respect to a Change of Control Transaction~~any provisions set forth in this Section 3.1 (including this clause (i)); provided, ~~or the Issuer makes a public announcement~~ however, that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) ~~voluntarily commence~~ nothing contained in this Section 3.1 shall prohibit the Investor from making confidential, non-public proposals to, or entering into confidential, non-public discussions, negotiations, arrangements or agreements with, the Company and with third parties with the express authorization of the Company, which the Investor or any ~~proceeding~~ Affiliate may request in a confidential, non-public manner, regarding a transaction or ~~file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter~~ matter of the type described in ~~effect~~the foregoing clauses (a) and (f), (B) ~~consent to~~ the ~~institution of,~~ mere voting in accordance with Section 5 hereof of any voting securities of the Company held by the Investor or ~~fail to contest in~~ its Affiliates shall not constitute a ~~timely and appropriate manner,~~ violation of any ~~proceeding or petition described in clause~~ of clauses (Aa) through (h) above, and (C) ~~apply for or consent~~ nothing in the foregoing clause (b) shall prohibit the Investor from proposing to the ~~appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets,~~ Company’s Nominating and Corporate Governance Committee (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees and not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior pursuant to the ~~execution of such agreement,~~ advance notice provisions set forth in the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%Company’s bylaws), in a confidential, non public manner, potential director candidates for consideration by the ~~event (i)~~ Company’s Nominating and Corporate Governance Committee, which candidates the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion Investor believes would be in the best interest of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, Company and ~~make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~its stockholders.

Appears in 1 contract

Samples: Investor Agreement (Alnylam Pharmaceuticals, Inc.)

Standstill. (a) ~~From and after~~ At all times prior to the ~~date hereof~~Early Termination Date, ~~the Investor will~~ Apollo shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its Affiliates not to, ~~directly~~ acquire or ~~indirectly~~agree to acquire, ~~acquire Beneficial Ownership~~ by purchase or otherwise, any Voting Securities of the Company or any of its Affiliates, other than: (i) the Converted Shares, or an acquisition as a result of a stock split, stock dividend or similar recapitalization, (ii) acquisitions of Voting Securities that together with all Voting Securities owned by Apollo and its Affiliates do not exceed 15% of the Total Voting Power, (iii) stock options or similar rights granted as compensation for performance as a director or officer of the Company or its Subsidiaries (and any shares ~~of Issuer Common Stock, including for purposes of this Section 1.1(a~~issuable upon exercise thereof), (iv) transfers between or among the Apollo Entities, (v) any rights that are granted to all Stockholders (and any shares issuable upon exercise thereof), ~~rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value~~ and (~~in whole or in part~~vi) ~~from such Issuer Common Stock, if, after giving effect to such acquisition,~~ acquisitions of Voting Securities approved by the ~~Investor’s Investor Percentage Interest would exceed the Cap~~Company; provided, however, that (A) if Apollo or any of its Affiliates in good faith inadvertently acquires Voting Securities in violation of these provisions and within 30 business days after the first date on which it has actual knowledge (including by way of written notice given by the Company) that a violation has occurred Apollo or any of its Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that Apollo and its Affiliates no longer beneficially own any such ~~restriction on acquisitions will~~ shares or have any agreement or understanding relating to such shares, this Section 5(a) shall be deemed to not have been violated; and (B) no violation of this provision shall be ~~applicable~~ deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (x) investments in investment funds as to which Apollo has no control or power to control with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends voting or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer investment decisions or (vy) ~~which has been approved~~ acquisitions of securities by a ~~majority of the Non-Investor Directors.~~limited partner in Apollo or an Affiliate thereof as to which limited partner Apollo has no control or power to control; (b) ~~Notwithstanding~~ The obligations of Stockholders under Section 5(a) shall terminate on the ~~provisions of Section 1.1(a), at any time following~~ first date (the ~~earlier of (x~~"Early Termination Date') ~~ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ on which either of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectlyevents occurs: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: The earlier of (A) ~~except to~~ any time after the ~~extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion~~ fifth anniversary of the ~~assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer~~Closing Date, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in Shares represent the ~~event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ lesser of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) ~~the Issuer Board recommends that the stockholders~~ 3% of the ~~Issuer tender their shares~~ fully diluted equity interests in ~~response~~ the Company (calculated giving effect to ~~such offer~~ the exercise of all outstanding options, warrants and other rights to purchase or ~~does not recommend against~~ acquire any Equity Interests of the ~~tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or~~ Company), and (2) ~~the Issuer Board later publicly recommends that the stockholders~~ one million (1,000,000) shares of ~~the Issuer tender their shares in response to such offer;~~Common Stock; and (B) June 30, 2008. (ii) If the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself andCompany shall, in ~~such event~~breach of its obligations under this Agreement, ~~such announcement is made with the approval of the Issuer Board; (iii) subject~~ fail to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees nominate for election to the ~~Issuer~~ Board ~~at any Election Meeting or (y) if so nominated are not so elected to~~ the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor designee set forth by Apollo pursuant to Section ~~1.1(g~~3(a), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investors Agreement (Apollo Investment Fund Iv Lp)

Standstill. Until the later to occur of the close of business on (ax) ~~From~~ the fifth anniversary of the Closing and (y) the date that is one year after the date ~~hereof~~on which the Purchasers (including their Affiliates) no longer own any Notes or Conversion Shares (including the Notes originally issued to Citibank, as assignee of the ~~Investor~~ Ocean Purchasers), each Purchaser and its Affiliates will not, alone or in concert with others (and each Purchaser and its Affiliates will ~~cause each Investor Affiliate~~ not advise, assist or encourage others to), directly or indirectly, ~~acquire Beneficial Ownership~~ unless specifically permitted in writing in advance by the Company: (i) by purchase or otherwise, acquire, or agree to acquire, beneficial ownership of ~~shares~~ any securities of ~~Issuer Common Stock, including for purposes~~ the Company having the ordinary power to vote in the election of ~~this Section 1.1(a), rights,~~ directors of the Company ("VOTING SECURITIES") or direct or indirect rights or options ~~or other derivative securities or contracts or instruments~~ to acquire such beneficial ownership ~~that derive their value (in whole or in part) from such Issuer Common Stock,~~ if, ~~after giving effect to~~ as a result of such acquisition, the ~~Investor’s Investor Percentage Interest~~ Purchasers and their respective Affiliates would ~~exceed~~ beneficially own Voting Securities representing in excess of 1.0% of the ~~Cap~~total voting power of all then outstanding Voting Securities (such percentage limitation being the "PERCENTAGE LIMITATION"); ~~provided, however,~~ PROVIDED that the foregoing shall not prohibit (and such ~~restriction on acquisitions will~~ percentage shall not ~~be applicable~~ include) beneficial ownership of Voting Securities (w) issued in connection with the IXC Transaction with respect to the ~~acquisition~~ 50,000 shares of common stock of IXC owned by the ~~Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to~~ Purchasers on the ~~Purchase Agreement (unless~~date hereof, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ~~ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ issued upon conversion of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actionsNotes, (y) received or receivable under the ~~date Issuer publicly recommends a Third Party Offer~~ terms of the Notes or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) ~~at any time following December 31~~issued as dividends or distributions on the Conversion Shares; PROVIDED, ~~2016~~FURTHER, ~~so long as,~~ that in the ~~case of~~ event any Purchaser transfers (in accordance with Section 8.13) any Notes or any Conversion Shares or any Notes are redeemed by the Company, the foregoing shall not prohibit any Purchaser or an ~~action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms~~ Affiliate of such ~~proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer~~ Purchaser from acquiring Voting Securities so long as the aggregate number of Voting Securities acquired does not exceed the aggregate number of Voting Securities transferred by any such ~~tender~~ Purchaser or ~~exchange offer (~~Affiliate of such ~~tender~~ Purchaser or ~~exchange offer meeting~~ redeemed by the ~~requirements set forth in this Section 1.1(b)~~Company, ~~a “Permitted Offer”): (i) is commenced and made in accordance with~~ as the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; case may be; (ii) ~~is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight~~make, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, ~~directly or indirectly,~~ any “"solicitation” " of “"proxies” " (as ~~such terms are~~ defined ~~under~~ in Regulation 14A under the Exchange Act) relating to ~~vote, or seek to advise or influence~~ any ~~Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy~~ shares of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; Voting Securities; (iii) call, or in any way consent to or participate in a call ~~or seek to call a~~ for, any special meeting of ~~Issuer’s stockholders~~ shareholders of the Company; (iv) request, or ~~initiate~~ take any ~~stockholder~~ action to obtain or retain, any list of holders of Voting Securities; (v) initiate, propose or participate in the making of any shareholder proposal ~~for action by Issuer’s stockholders,~~ relating to the Company; (vi) deposit any shares of Voting Securities in a voting trust or subject any shares of Voting Securities to any voting agreement or arrangement (including any grant of an irrevocable proxy); (vii) form, join or in any way participate in a ~~13D Group~~ partnership, limited partnership, limited liability company, syndicate or ~~otherwise act~~ other group (including a "group" as defined in ~~concert~~ Section 13(d) under the Exchange Act) with respect to, or for the purpose of acquiring, holding or disposing of, any ~~Person~~shares of Voting Securities, ~~in each case,~~ or any securities the ownership of which would make the owner thereof a beneficial owner of shares of Voting Securities; (viii) make any offer or proposal with respect to the ~~Issuer Common Stock~~acquisition, directly or indirectly, of the Company or any of its securities or assets or with respect to any business combination or similar transaction with, change in control of, or ~~seek~~restructuring, ~~propose~~ recapitalization or other extraordinary transaction involving the Company or any of its assets, PROVIDED, that this clause (viii) shall not limit the right of the Purchasers to acquire shares of Voting Securities in a manner that does not violate the Percentage Limitation; (ix) except as otherwise ~~act alone or~~ provided in ~~concert with others~~Section 8.10 hereof, ~~to influence or control Issuer’s management~~seek representation on, the ~~Issuer~~ removal of any members of, or a change in the composition or size of, the Company Board ~~or policies, except that this subsection does not restrict~~ of Directors; (x) disclose any intent, purpose, plan or proposal with respect to the ~~Investor Directors from participating as members~~ Company, the Company Board of ~~the Issuer Board and~~ Directors, management, policies or affairs or any ~~committees thereof in their capacity as such and~~ of its securities or assets or these provisions that is inconsistent with these provisions, including any intent, purpose, plan or proposal that is conditioned on, or would require waiver, amendment, nullification or invalidation of, any of these provisions; (~~y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv~~xi) take any action ~~which would or would reasonably be expected to force Issuer~~ that could require the Company to make a any public ~~announcement regarding~~ disclosure relating to any such intent, purpose, plan, proposal or condition; (xii) request the Company Board of Directors to waive, amend or consent to any action prohibited by these provisions; (xiii) assist, advise or encourage any person with respect to, or seeking to do, any of the ~~types of matters set forth~~ foregoing. Notwithstanding anything to the contrary contained herein, nothing contained in ~~clause (i) above; (v) bring any action, or otherwise act, to contest the validity of~~ this Section ~~1.1(d); or (vi) enter into~~ 8.11 shall affect or impair the right of any ~~discussions or arrangements with any third party with respect to any~~ director of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant~~ Company to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) ~~not appointed to~~ act as a member of the ~~Issuer~~ Company Board ~~as contemplated herein~~ of Directors or ~~nominated for inclusion on management’s slate of nominees for election to the Issuer Board at~~ any ~~Election Meeting~~ committee thereof or (y) ~~if so nominated are not so elected~~ take any action necessary or advisable to ~~the Issuer Board, or the Issuer otherwise breaches its~~ carry out his obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect and duties as a director of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsCompany. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investment Agreement (Cincinnati Bell Inc /Oh/)

Standstill. Between the Execution Date and the fourth anniversary of the Execution Date, except as expressly authorized by Section 1 above during the Interim Period, each member of the Sweet 13D Group (including McKinley solely in his individual capacity but excluding the obligatxxxx xx subsection (a)(ii) and (a) ~~From~~ (iii) below), agrees that it and ~~after the date hereof, the Investor will~~ its respective Affiliates shall not, without the prior written consent of the Board, which consent may be withheld in its sole and ~~will cause each Investor Affiliate not to~~absolute discretion, directly or indirectly, alone or in concert with any other Person: (i) acquire, offer to acquire or agree to acquire, directly or indirectly, by purchase or otherwise, Beneficial Ownership of ~~shares of Issuer Common Stock, including for purposes of this Section 1.1(a),~~ any Spectranetics Securities (or any direct or indirect rights, options or warrants for any Spectranetics Securities, except as may be employed through hedging or similar risk management strategies), other ~~derivative securities or contracts or instruments~~ than the Spectranetics Securities that such Person Beneficially Owns as of the date hereof as referenced in Section 12(c) of this Settlement Agreement, provided, however, that McKinley may acquire additional common stock on the open market to ~~acquire such ownership~~ txx xxxxxt that ~~derive their value (in whole or in part) from such Issuer~~ his total Beneficial Ownership does not exceed 300,000 shares of Common Stock; (ii) encourage any Person to acquire, ifor (iii) advise any Person with respect to the acquisition or proposed acquisition of, ~~after giving effect~~ Spectranetics Securities other than attempts to dispose of such ~~acquisition,~~ aforementioned Spectranetics Securities that such Person Beneficially Owns as of the ~~Investor’s Investor Percentage Interest would exceed the Cap~~date hereof; provided, however, that ~~such restriction on~~ this Section (a) shall not apply to acquisitions ~~will not be applicable with respect to~~ resulting from (x) the ~~acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ exercise of the ~~Investor in Section 4.2(d~~vested options held by Largey, Samek or Sweet; or (y) ~~hereof is not true and correct), (ii) as a result of any~~ stock splits, reverse stock splits or xxxxx rxxxxxsifications affecting all outstanding Spectranetics Securities (or any class(es) thereof) or stock dividends or other pro rata distributions by Spectranetics or ~~recapitalizations~~ its direct or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made indirect subsidiaries to all holders of ~~Issuer Common Stock~~Spectranetics Securities (or any class(es) thereof) or from exercise of any rights so distributed; ~~(iii~~b) ~~will expire no earlier than midnight~~solicit, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to ~~effect~~ solicit, advise any Person with respect to the Solicitation of, or ~~seek, offer or propose (whether publicly or otherwise) to effect or~~ in any other way participate in: , endorse or facilitate any Solicitation of, Proxies or consents with respect to any Spectranetics Securities, or become a Participant, or otherwise engage in any Solicitation of Proxies or consents (A) ~~except~~ with respect to any matter submitted or to be submitted to the ~~extent~~ vote of the holders of any Spectranetics Securities at any annual or special meeting or by written consent, including, without limitation, with respect to the election of Directors of Spectranetics in opposition to the nominees recommended by the Board or otherwise ~~specifically permitted~~ for the purpose of influencing or acquiring control of the management of Spectranetics, or (B) for the purpose of calling a special meeting of Spectranetics' stockholders or the holders of any Spectranetics Securities; c) advise or seek to advise any Person with respect to the voting of any Spectranetics Securities; d) submit, encourage any other Person to submit, advise or assist any Person with respect to the submission of, or otherwise participate in, or endorse, or facilitate any nominations or proposals to Spectranetics or to the holders of Spectranetics Securities for consideration by the holders of any Spectranetics Securities at any annual or special meeting of such holders or in any action to be taken by written consent pursuant to Spectranetics' charter or bylaws, Rule 14a-3 under the Exchange Act, the provisions of any document governing the terms of any such Spectranetics Securities or governing the rights of the holders thereof, or otherwise; e) otherwise take any action to request a special meeting of the holders of any Spectranetics Securities; f) request, or take any action to obtain or retain, any list of holders of Common Stock; g) deposit any Spectranetics Securities in a voting trust or subject them to a voting agreement or other agreement or arrangement of similar effect or otherwise join or form a partnership, limited partnership, limited liability company, syndicate or other Group (except insofar as a Group consisting solely of the members of the Sweet 13D Group shall be deemed to exist at the Execution Date) for the purpose of acquiring, holding, voting or disposing of any Spectranetics Securities, or for the purpose of circumventing or avoiding any of the provisions of this Settlement Agreement, encourage, advise or assist any Person to do any of the foregoing; h) engage in, or offer, agree or propose to engage in, any acquisition of ~~any Issuer Common Stock (~~the Company or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any substantially all of its ~~Subsidiaries~~ assets (~~provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or~~ other ~~business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares~~ than to participate therein as a stockholder on terms generally available to all of ~~Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination~~Spectranetics' stockholders); or ~~(C)~~ arrange, or in any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate inway participate, directly or indirectly, in any ~~“solicitation”~~ financing for any such transaction or for the purchase by any person of ~~“proxies”~~ any Spectranetics Securities or any assets of Spectranetics; i) otherwise act (~~as such terms are defined under Regulation 14A under the Exchange Act~~x) to ~~vote~~seek representation on the Board, (y) to seek the removal of any members of, or ~~seek~~ a change in the composition or size of, the Board, or (z) to ~~advise~~ acquire control of Spectranetics or ~~influence~~ any ~~Person~~ of its securities or ~~entity~~ assets, provided, however, that this subsection (z) shall not apply to acquisitions resulting from (i) the exercise of the vested options held by Largey, Samek or Ms. Sweet; or (ii) stock splits, reverse stock splixx xx otxxx reclassifications affecting all outstanding Spectranetics Securities (or any class(es) thereof) or stock dividends or other pro rata distributions by Spectranetics or its direct or indirect subsidiaries to all holders of Spectranetics Securities (or any class(es) thereof) or from exercise of any rights so distributed; j) publicly disclose any intent, purpose, plan or proposal with respect to the ~~voting of~~Company, ~~any Issuer Common Stock~~ its Board, management, policies, or affairs or any ~~demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders~~ its securities or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privatelyassets, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action ~~which would or would reasonably be expected to force Issuer~~ that could require the Company to make a any public ~~announcement regarding~~ disclosure relating to any ~~of the types of matters set forth in clause (i) above; (v) bring any action~~such intent, purpose, plan or ~~otherwise act, to contest the validity of this Section 1.1(d)~~proposal; or ~~(vi~~k) ~~enter into any discussions~~ assist, advise, encourage, facilitate or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement ~~regarding a~~ or arrangement to assist or advise, any other Person in taking any action referenced in any of Sections 9(a) through (ij) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreementabove. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Spectranetics Corp)

Standstill. During the period (such period, the “Standstill Term”) commencing as of the Closing Date and continuing until the later of (A) the date that concludes any 90 day continuous period during which no Investor Designee serves on the Board, provided that, notwithstanding the foregoing, if the Investor subsequently designates a new Investor Designee that serves on the Board following such 90-day period, the Standstill Term shall be reinstated commencing as of such date that such new Investor Designee serves on the Board, and (B) the date on which the Investor and its Affiliates beneficially own less than five percent (5.0%) of the shares of Common Stock then issued and outstanding, neither the Investor nor any Investor Affiliate Assignee Parent shall do any of the following, either directly or indirectly by causing, requesting or directing its Affiliates to do any of the following, except as expressly approved or invited in writing by the Company: (a) ~~From~~ other than Permitted Purchases and ~~after the date hereof, the Investor will not, and will cause each Investor Affiliate not to~~purchases of Additional Subscription Shares, directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Common Stock and/or Common Stock Equivalents and/or any instrument that gives the Investor or any of ~~Issuer Common Stock~~its Affiliates the economic equivalent of ownership of an amount of securities of the Company (a “Derivative”), ~~including for purposes of~~ except, nothing in this Section ~~1.1(a), rights, options~~ 3.1(a) shall prevent or ~~other derivative securities~~ prohibit the Investor or ~~contracts or instruments to acquire such ownership that derive their value~~ any of its Affiliates from (i) investing in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable a fund with respect to ~~the acquisition by~~ which the Investor or any of its Affiliates does not have or share decision-making authority over investment or divestment decisions; or (ii) in the case of ~~Beneficial Ownership~~ an Affiliate that is a private equity fund or a credit fund, investing through a portfolio company of ~~Issuer~~ such fund; (b) make a tender, exchange or other public offer to acquire Common Stock and/or Common Stock Equivalents; (c) directly or indirectly, (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company or propose any matter to be voted upon by the stockholders of the Company, or (ii) ~~as a result of~~ propose or nominate for election to the Board any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-~~Board (excluding the Investor ~~Directors.~~Designee, if any); (bd) ~~Notwithstanding~~ directly or indirectly, encourage, accept or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) for securities of the ~~provisions~~ Company (if such offer or proposal would, if consummated, result in a Change of ~~Section 1.1(a~~Control of the Company, such offer or proposal is referred to as an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange~~ by the Company recommending that stockholders accept any such offer ~~which, if consummated, would result in~~ filed after such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each caseoffer has commenced, the Investor ~~Affiliates will~~ shall not be ~~entitled to commence and accept~~ prohibited from taking any of the actions otherwise prohibited by this Section 3.1(d) for ~~purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer~~ so long as the Board maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (iie) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or propose or seek or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act~~) to vote~~), or seek to advise or influence any ~~Person~~ Person, with respect to voting of any securities of the Company; (f) deposit any securities of the Company in a voting trust or ~~entity~~ subject any securities of the Company to any arrangement or agreement with respect to the voting ofof such securities, including the granting of any ~~Issuer Common Stock~~ proxy; (g) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, purchase of any securities of the Company or any ~~demand for a copy of Issuer’s stock ledger~~Derivative, ~~list of stockholders~~ or any similar transaction involving the Company or (ii) any recapitalization, restructuring, liquidation or other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the ~~Investor’s exercise or enforcement of rights under~~ Company, in each case without the ~~Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ prior written consent of the ~~Issuer~~ Board (a transaction described in clauses (i) and ~~any committees thereof~~ (ii) that would result in ~~their capacity~~ a Change of Control, is referred to as ~~such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of~~ a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules“Business Combination”); (~~iii~~h) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (g) above, or, directly or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders~~indirectly, form, join or in any way participate in a ~~13D Group~~ “partnership, limited partnership, syndicate, or ~~otherwise act~~ other group” as such terms are used in ~~concert with any Person, in each case,~~ the rules of the SEC with respect to the ~~Issuer Common Stock,~~ Company or ~~seek,~~ any securities of the Company; (i) request or propose ~~or otherwise act alone or in concert with others,~~ to ~~influence or control Issuer’s management,~~ the ~~Issuer~~ Board or ~~policies~~the Company (or any of its officers, ~~except that~~ directors, Affiliates employees, attorneys, accountants, financial advisors and other professional representatives), directly or indirectly, any amendment or waiver of any provision of this ~~subsection does not restrict~~ Section 3.1 (~~x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and~~ including this clause (~~y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B~~i)); (ivj) make any public announcement regarding, or take any action ~~which would or would reasonably be expected to force Issuer~~ that could require the Company to make a public announcement ~~regarding~~ regarding, a potential Business Combination or any of the ~~types of~~ matters set forth in ~~clause~~ clauses (a) through (i) above~~; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)~~; or (vik) enter into ~~any discussions~~ discussions, negotiations, arrangements or ~~arrangements~~ agreements with any ~~third party with respect~~ Person relating to ~~any of~~ the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period actions referred to in ~~the previous sentence.~~ (fa) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses through (i) ~~or (ii) of~~ above; provided, however, that nothing contained in this Section ~~1.1(f) has occurred and resulted in~~ 3.1 shall prohibit the ~~restrictions imposed under Section 1.1(d) (other than the provisions~~ Investor or any of ~~Section 1.1(d)(i)) ceasing to apply~~ its Affiliates from making confidential, nonpublic proposals to the ~~Investor, then, in~~ Board for a transaction involving a Business Combination following the ~~event~~ public announcement by the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days Company after the ~~commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends~~ Closing Date that ~~the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters~~ it has entered into ~~substantive discussions~~ a definitive agreement with ~~one or more Persons regarding,~~ a ~~proposal with respect to~~ Third Party for a ~~Change of Control Transaction~~transaction involving a Business Combination, or the ~~Issuer makes~~ Investor Designee from performing its duties as a ~~public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ member of the ~~Issuer~~ Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Investors Rights Agreement (Loop Industries, Inc.)

Standstill. During the Standstill Term, neither the Investor nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~Stock and/or Common Stock Equivalents; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 8.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership~~ shares constituting Shares of ~~Issuer~~ Then Outstanding Common Stock ~~(i) pursuant to~~ is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of ~~any stock splits~~a repurchase by the Company of Shares of Then Outstanding Common Stock, stock ~~dividends~~ split, stock dividend or ~~other distributions or recapitalizations or similar offerings made generally available by~~ a recapitalization of the ~~Issuer or~~ Company, the Standstill Parties shall not be required to dispose of any ~~Subsidiary thereof to holders~~ of ~~Issuer~~ their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership increasing; (b) directly or ~~other equity securities~~ indirectly, seek to have called any meeting of the ~~Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities~~ stockholders of the ~~Issuer) as a result~~ Company, propose or nominate for election to the Company’s Board of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender~~ Directors or ~~exchange offer which, if consummated, would result~~ cause to be voted in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect favor of such ~~Third Party Offer under any shareholder rights plan or granting approval of such offeror~~ person for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as election to the ~~terms~~ Company’s Board of ~~such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares~~ Directors any Shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Then Outstanding Common Stock; (~~iii~~c) ~~will expire no earlier than midnight~~directly or indirectly, ~~New York City time~~encourage or support a tender, ~~on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject~~ exchange or other offer or proposal by any Third Party with respect to ~~customary conditions to the obligation~~ Shares of ~~the Investor Affiliates to purchase Issuer~~ Then Outstanding Common ~~Stock~~Stock or Common Stock Equivalents; provided, ~~that~~however, that from and after the filing of a Schedule 14D-9 (Aor successor form of Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 under the 0000 Xxx) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Company recommending that stockholders accept any such offer or proposal, Investor ~~Affiliates, constitute no less than a majority~~ shall not be prohibited from taking any of the ~~outstanding shares of Issuer Common Stock outstanding at~~ actions otherwise prohibited by this Section 8.1(c) only for so long as the ~~time of commencement that are~~ Company maintains and does not ~~Beneficially Owned by the Investor Affiliates as of the date~~ withdraw such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer.recommendation; (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the ~~Exchange Act~~0000 Xxx) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; (f) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~Issuer Common Stock~~ recapitalization, restructuring, liquidation or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (e) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group~~ “partnership, limited partnership, syndicate, or ~~otherwise act in concert~~ other group” within the meaning of Section 13(d)(3) of the 1934 Act; (h) enter into discussions, negotiations, arrangements or agreements with any ~~Person, in each case, with respect~~ Person relating to the ~~Issuer Common Stock~~foregoing actions referred to in (a) through (e) above; provided, ~~or seek~~however, ~~propose or otherwise act alone or~~ that (A) nothing in ~~concert with others, to influence or control Issuer’s management,~~ the ~~Issuer Board or policies, except that this subsection does not restrict~~ foregoing clause (xb) ~~the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y)~~ shall prohibit the Investor from ~~joining or~~ proposing to the Company’s Nominating and Corporate Governance Committee (and not pursuant to the advance notice provisions set forth in ~~any way participating~~ the Company’s bylaws), in a ~~13D Group~~ confidential, nonpublic manner, potential director candidates for consideration by the Company’s Nominating and Corporate Governance Committee, which candidates the Investor believes would be in the best interest of the Company and its stockholders; and (B) nothing contained in this Section 8.1 prohibits the Investor or ~~otherwise acting in concert with~~ its Affiliates from acquiring a company or business that owns Shares of Then Outstanding Common Stock and/or Common Stock Equivalents provided that any ~~Person, in each case,~~ such securities of the Company so acquired will be subject to ~~exercise its rights under~~ the provisions of this Section ~~1.1(d)(ii)(B);~~8.1; or (ivi) ~~take~~ request or propose to the Company’s Board of Directors (or any ~~action which would~~ committee thereof), any member(s) thereof or any officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 8.1 (including this clause (i)); provided, however, that (A) nothing contained in this Section 8.1 shall prohibit the Investor from making proposals to the Company’s Chairman or Chief Executive Officer on a confidential, nonpublic basis for a proposed transaction between the parties of the type described in the foregoing clauses (a) and (f), so long as the Investor reasonably believes in good faith, based on the written advice of its outside counsel, that neither it nor the Company would reasonably be expected to ~~force Issuer~~ be required by applicable Law or stock exchange requirement to ~~make a public announcement regarding~~ disclose publicly any of such proposal and (B) nothing in the ~~types of matters~~ foregoing clause (b) shall prohibit the Investor from proposing to the Company’s Nominating and Corporate Governance Committee (and not pursuant to the advance notice provisions set forth in ~~clause (i) above; (v) bring any action~~the Company’s bylaws), ~~or otherwise act~~on a confidential, ~~to contest~~ non-public basis, potential director candidates for consideration by the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any~~ Company’s Nominating and Corporate Governance Committee, which candidates the Investor believes would be in the best interest of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~Company and its stockholders, the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor ~~Percentage Interest is equal~~ reasonably believes in good faith, based on the written advice of its outside counsel, that neither it nor the Company would reasonably be expected to be required by applicable Law or ~~greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect~~ stock exchange requirement to disclose publicly any such proposal. None of (x) ~~a Change~~ the ownership nor purchase by an employee benefit plan of ~~Control Transaction~~ the Investor or the Investor’s Affiliates in any diversified index, mutual or pension fund managed by an independent advisor, which fund in-turn holds, directly or indirectly, securities of the Company, (y) ~~a sale of a material portion~~ transfers or resales of the ~~Issuer’s assets outside~~ Shares by the ~~ordinary course of business~~ Investor to any other person in compliance with Section 7.5 or (iiz) the ~~Issuer provides any notice to Investor pursuant to Section 1.1(g)~~mere voting of the Shares, ~~in each case, Investor~~ will be ~~entitled~~ deemed to ~~engage in private discussions with, and make private proposals to, the Issuer Board or management~~ be a breach of the ~~Issuer with respect to such proposed transaction or a competing proposal by the~~ Investor’s standstill obligations under this Section 8.1.

Appears in 1 contract

Samples: Securities Purchase Agreement (Translate Bio, Inc.)

Standstill. During the Standstill Period, the Raging Capital Group, each Member, each Raging Capital Director and the Raging Capital Nominee and each of their respective Affiliates shall not, without the prior written consent of the Company: (a) ~~From and after the date hereof~~own, ~~the Investor will not~~acquire, ~~and will cause each Investor Affiliate not to~~announce an intention to acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, ~~acquire~~ by purchase or otherwise, (i) Beneficial Ownership of any Common Stock representing in the aggregate in excess of 22.5% of the shares of ~~Issuer~~ Common ~~Stock~~Stock outstanding at any given time; provided that shares of Common Stock underlying Convertible Notes or New Convertible Notes shall not be deemed to be Beneficially Owned, ~~including~~ regardless of the ability of the holders thereof to convert such Convertible Notes or New Convertible Notes into Common Stock at any given time, for purposes of calculating this ~~Section 1.1(a), rights, options~~ ownership limitation unless and until such Convertible Notes or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as New Convertible Notes are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer actually converted into Common Stock pursuant to ~~a tender~~ the terms thereof, or ~~exchange offer so long as~~ (ii) Beneficial Ownership of any Senior Notes, Convertible Notes, New Convertible Notes or any other interests in the Company’s indebtedness such ~~tender or exchange offer (~~that the aggregate principal amount of all such ~~tender or exchange offer meeting~~ indebtedness exceeds $40,000,000; provided that nothing herein will require Common Stock to be sold to the ~~requirements set forth~~ extent the ownership limit in ~~this Section 1.1(b), a “Permitted Offer”):~~ subparagraph (i) is ~~commenced and made in accordance with~~ exceeded solely as the ~~applicable rules and regulations under the Exchange Act applicable to tender~~ result of a share repurchase or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer similar Company action that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating reduces the number of outstanding shares of ~~Issuer~~ Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; andStock; (vb) ~~provides for consideration payable in cash~~make, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate inparticipate, directly or indirectly, in any “solicitation” of “proxies” to vote (as such terms are ~~defined under Regulation 14A under~~ used in the ~~Exchange Act) to vote~~rules of the SEC), or seek to advise or influence any ~~Person or entity~~ person with respect to the voting of, any ~~Issuer Common~~ Voting Stock ~~or any demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ the Company (other than ~~with respect to matters related to~~ in a Raging Capital Director’s or the ~~Investor~~Raging Capital Nominee’s ~~exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating~~ capacity as ~~members~~ a member of the ~~Issuer~~ Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a ~~13D Group or otherwise act~~ manner consistent with the Board’s recommendation in ~~concert~~ connection with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such ~~and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B~~matter); (ivc) ~~take any action which would~~ separately or ~~would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth~~ in ~~clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements~~ conjunction with any ~~third party~~ other person in which it is or proposes to be either a principal, partner or financing source or is acting or proposes to act as broker or agent, submit a recommendation of, proposal for or offer of (with ~~respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated~~ or ~~made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d~~without conditions) (~~other than~~ including to the ~~provisions of Section 1.1(d)(i)~~Board) ~~will terminate upon the expiration of the Restricted Period~~any Extraordinary Transaction, except confidentially in a manner that would not be reasonably likely to require public disclosure. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if “Extraordinary Transaction” means any of the following ~~occurs (provided, that, in~~ involving the ~~event~~ Company or any ~~matter described in clauses (i)~~ of its Subsidiaries or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months its or their securities or a material amount of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) assets or ~~subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ businesses of the ~~Issuer Common Stock is commenced (within the meaning~~ Company or any of ~~Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving~~ its Subsidiaries: any ~~breach of Section 1.1(d)) which~~ tender offer or exchange offer, ~~if consummated~~merger, ~~would result in such third party (~~acquisition, business combination, reorganization, restructuring, recapitalization, sale or ~~any 13D Group~~ acquisition of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material ~~Subsidiary or its debts, or of a substantial part of its~~ assets, ~~under any federal, state~~ liquidation or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.dissolution;

Appears in 1 contract

Samples: Settlement Agreement (Raging Capital Management, LLC)

Standstill. Each Holder hereby agrees that, from the Closing Date until the Standstill Termination Date, unless an exemption or waiver is otherwise approved in advance in writing by the Board, such Holder shall not, and shall cause the Restricted Party not to: (a) ~~From and after the date hereof~~purchase or otherwise acquire, ~~the Investor will not~~offer or propose to acquire, ~~and will cause each Investor Affiliate not to~~or solicit an offer to sell or agree to acquire, directly or indirectly, ~~acquire~~ alone or in concert with others, Beneficial Ownership of any Capital Stock or any Derivative Securities (excluding shares and securities received by way of ~~Issuer Common Stock~~stock dividend, ~~including for purposes of this Section 1.1(a), rights, options~~ stock reclassification or other ~~derivative securities~~ distributions or ~~contracts or instruments~~ offerings made available on a pro rata basis to ~~acquire such ownership that derive their value (in whole or in part~~the Company’s stockholders) ~~from such Issuer Common Stock,~~ if, after giving effect ~~to such acquisition~~thereto, the ~~Investor’s Investor Percentage Interest~~ Holders and the Restricted Party would ~~exceed~~ collectively Beneficially Own, in the ~~Cap~~aggregate, an amount of Capital Stock, including any Derivative Securities on an as-exercised, converted or exchanged basis, as applicable, in excess of the Stockholder Threshold; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unlessthat, ~~for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ if as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) reduction in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of ~~Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer~~ Common Stock outstanding at due to the ~~time~~ repurchase of ~~commencement that are not Beneficially Owned~~ shares of Common Stock by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such conditionCompany, the ~~“Minimum Condition”)~~ Holders and ~~(B) any conditions to~~ the ~~consummation of such offer may be waived by the Investor in its sole discretion, other than~~Restricted Party collectively Beneficially Own, in the ~~event no Third Party Offer is outstanding~~ aggregate, an amount of Capital Stock, including any Derivative Securities on an as-exercised, converted or ~~is made~~exchanged basis, as applicable, in ~~each case, during~~ excess of the ~~pendency of such Permitted Offer~~Stockholder Threshold, the ~~Minimum Condition; and~~Holders and the Restricted Party shall not be in violation of this Section 3.1(a) so long as the Holders and the Restricted Party do not take any of the actions referred to in the first clause of this Section 3.1(a); (vb) ~~provides for consideration payable in cash~~make, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, alone or in concert with others (including by or through any group), any “solicitation” of “proxies” (as such terms are defined ~~under~~ or used in Regulation 14A under the Exchange Act) to ~~vote~~vote Common Stock or other Capital Stock of the Company or to provide or withhold consents with respect to Common Stock or other Capital Stock of the Company, whether subject to or exempt from the proxy rules, or seek to advise or influence any Person or entity with respect to the voting of, or the providing or withholding consent with respect to, any ~~Issuer~~ Common Stock or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members Capital Stock of the ~~Issuer Board and~~ Company; provided, however, that the foregoing will not be deemed to restrict or limit in any ~~committees thereof~~ manner in ~~their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x)~~ which any ~~proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ of the ~~Issuer’s stockholders is required under Delaware Law~~ Holders or ~~Nasdaq rules~~the Restricted Party votes any of its respective shares of Common Stock or Capital Stock, directly or by proxy, subject to compliance with the other terms and conditions of this Agreement; (~~iii~~c) ~~call~~ except as permitted by Section 3.2, either directly or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act~~ indirectly in concert with others (including by or through any ~~Person, in each case,~~ group) make any offer with respect ~~to the Issuer Common Stock~~to, or ~~seek~~make or submit a proposal with respect to, ~~propose~~ or ~~otherwise act alone~~ ask or request any other Person to make an offer or proposal with respect to, any transaction that would, if consummated, be reasonably likely to result in ~~concert with others, to influence or~~ a change of control ~~Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members~~ of the ~~Issuer Board and any committees thereof in their capacity as such and (y)~~ Company, including a merger, business combination, restructuring, reorganization, recapitalization, tender or exchange offer or asset disposition involving the ~~Investor from joining~~ Company or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of its Affiliates; provided, however, that the ~~types of matters set forth in clause~~ Holders and the Restricted Party shall be permitted to (i) ~~above; (v) bring~~ vote on any ~~action, or otherwise act, to contest~~ such transaction in accordance with the ~~validity~~ terms and conditions of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (Agreement and ~~the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or~~ (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender into any tender offer or exchange offer ~~for at least thirty-five percent (35%) of the Issuer Common Stock is~~ not commenced ~~(within the meaning of Section 14(d) of the Exchange Act)~~ by a ~~third Person which, for~~ Holder or the ~~avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer,~~ Restricted Party if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1A) the ~~Issuer~~ Board recommends (by majority vote) that the stockholders of the ~~Issuer~~ Company tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ~~ten (10) days~~ 10 Business Days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2B) the ~~Issuer~~ Board later publicly recommends (by majority vote) that the stockholders of the ~~Issuer~~ Company tender their shares in response to such offer; (iid) except as provided in this Agreement, either directly or indirectly in concert with others (including by or through any group) seek representation on the ~~Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction,~~ Board or the ~~Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ board of directors (or equivalent governing body) of any of the ~~Issuer Board~~Company’s controlled Affiliates, seek to remove any members of the Board or expand or reduce the size of the Board or otherwise act alone or in concert with others (including by or through any group) to seek control of the Board or the board of directors (or equivalent governing body) of any of the Company’s controlled Affiliates; (~~iii~~e) ~~subject~~ form, join, knowingly encourage the formation of or knowingly engage in discussions relating to the ~~obligations~~ formation of, or participate in, a “group” within the meaning of Section 13(d)(3) of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated Exchange Act for ~~inclusion on management’s slate~~ purposes of ~~nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board~~seeking control, or influencing the ~~Issuer otherwise breaches its obligations under Article 3; (iv)~~ control or management of, the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredCompany; or (~~vii~~f) ~~the Issuer~~ either directly or indirectly in concert with others (including by or through any ~~material Subsidiary shall (A~~group) ~~voluntarily commence~~ publicly announce any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution ofintention, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into or disclose any ~~agreement regarding~~ plan or arrangement inconsistent with the foregoing (including publicly making a ~~(i) merger~~request that the Company or the Board waive, ~~(ii) consolidation, (iii) Change of Control Transaction,~~ amend or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the terminate any provisions of this Section ~~1.1(d~~3.1), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stockholder Agreement (California Resources Corp)

Standstill. During the Standstill Term, neither the Investor nor the Holder nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Holder shall cause its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares~~ Shares of ~~Issuer~~ Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer~~ Shares of Then Outstanding Common ~~Stock~~Stock and/or Common Stock Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will~~ notwithstanding the provisions of this Section 5.1(a), if the number of shares constituting Shares of Then Outstanding Common Stock is reduced or if the aggregate ownership of the Standstill Parties is increased as a result of a repurchase by the Company of Shares of Then Outstanding Common Stock, stock split, stock dividend or a recapitalization of the Company, the Standstill Parties shall not be ~~applicable with respect~~ required to ~~the acquisition by the Investor Affiliates~~ dispose of ~~Beneficial Ownership~~ any of ~~Issuer~~ their holdings of Shares of Then Outstanding Common Stock even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or indirectly, (i) ~~pursuant~~ seek to ~~the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ have called any meeting of the ~~Investor in Section 4.2(d) hereof is not true and correct)~~stockholders of the Company, (ii) ~~as a result~~ propose or nominate for election to the Company’s Board of Directors any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~Company’s Board of Directors or (iii) unless a person referred to in the foregoing clause (ii) is nominated by a third party in connection with such party’s publicly announced and not withdrawn Acquisition Proposal, fail to cause to be voted in accordance with the recommendation of the Company’s Board of Directors with respect to such person for election to the Company’s Board of Directors any Shares of Then Outstanding Common Stock; (bc) ~~Notwithstanding~~ directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person or group (an “Offeror”) the ~~provisions~~ consummation of ~~Section 1.1(a~~which would result in a Change of Control of the Company (an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange offer which, if consummated, would result in such Person becoming~~ by the ~~Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (~~Company recommending that stockholders accept any such offer, ~~a “Third Party Offer”), unless during such ten (10~~Holder shall not be prohibited from taking any of the actions otherwise prohibited by this Section 5.1(c) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as the Company maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Shares of Then Outstanding Common Stock of the Company; (e) deposit any Shares of Then Outstanding Common Stock in a voting trust or ~~entity~~ subject any Shares of Then Outstanding Common Stock to any arrangement or agreement with respect to the voting ofof such Shares of Then Outstanding Common Stock; CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. (f) propose (i) any ~~Issuer Common Stock~~ merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~demand for a copy of Issuer’s stock ledger~~recapitalization, ~~list of stockholders~~ restructuring, liquidation or ~~any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (f) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (iih) ~~the Issuer solicits from one~~ enter into discussions, negotiations, arrangements or ~~more Persons, or enters into substantive discussions~~ agreements with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject any Person relating to the ~~obligations of the Investor under Section 3.2,~~ foregoing actions referred to in ~~the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either~~ (xa) ~~not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or~~ through (yg) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredabove; or (~~vii~~i) request or propose to the ~~Issuer~~ Company’s Board of Directors, any member(s) thereof or any ~~material Subsidiary shall~~ officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 5.1 (including this clause (i)); provided, however, that (A) ~~voluntarily commence~~ nothing contained in this Section 5.1 shall prohibit the Holder from making confidential, non-public proposals to, or entering into confidential, non-public discussions, negotiations, arrangements or agreements with, the Company and with third parties with the express authorization of the Company, which the Holder or any ~~proceeding~~ Affiliate may request in a confidential, non-public manner, regarding a transaction or ~~file any petition seeking liquidation~~matter of the type described in the foregoing clauses (a) and (f), ~~reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect,~~ and (B) ~~consent~~ nothing in the foregoing clause (b) shall prohibit the Holder from proposing to the ~~institution of, or fail to contest in a timely~~ Company’s Governance and ~~appropriate manner, any proceeding or petition described in clause~~ Nominating Committee (~~A) above, (C) apply for or consent~~ and not pursuant to the ~~appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for~~ advance notice provisions set forth in the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%Company’s bylaws), in a confidential, non-public manner, potential director candidates for consideration by the ~~event (i)~~ Company’s Governance and Nominating Committee, which candidates the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion Holder believes would be in the best interest of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, Company and ~~make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~its stockholders.

Appears in 1 contract

Samples: License Agreement (Vericel Corp)

Standstill. During the period (asuch period, the “Restricted Term”) ~~From~~ from and after the date ~~hereof~~of this Agreement until the earliest to occur of (i) the expiration or earlier termination of the Collaboration Agreement and (ii) the fourth (4th) anniversary of the Closing Date (as defined in the Purchase Agreement), neither the Investor nor any of its Affiliates (collectively, the “Standstill Parties”) shall (and the Investor ~~will not, and will~~ shall cause ~~each Investor Affiliate~~ its Affiliates not to), except as expressly approved or invited in writing by the Company: (a) directly or indirectly, acquire ~~Beneficial Ownership~~ beneficial ownership of ~~shares of Issuer Common Stock~~Then Outstanding Ordinary Shares and/or Ordinary Shares Equivalents, ~~including for purposes of this Section 1.1(a)~~or make a tender, ~~rights, options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer Common Stock~~Then Outstanding Ordinary Shares and/or Ordinary Shares Equivalents, ~~if,~~ if after giving effect to such acquisition, the ~~Investor’s Investor Percentage Interest~~ Standstill Parties would ~~exceed~~ beneficially own more than the ~~Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by~~ provisions of this Section 3.1(a), if the ~~Investor Affiliates~~ number of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to~~ shares constituting Then Outstanding Ordinary Shares is reduced or if the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation~~ aggregate ownership of the ~~Investor in Section 4.2(d) hereof~~ Standstill Parties is ~~not true and correct), (ii)~~ increased as a result of ~~any stock splits~~a repurchase by the Company of Then Outstanding Ordinary Shares, stock ~~dividends~~ split, stock dividend or ~~other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities~~ a recapitalization of the ~~Issuer)~~Company, ~~including rights offerings and distributions made generally~~ the Standstill Parties shall not be required to ~~holders~~ dispose of ~~Issuer Common Stock~~ any of their holdings of Then Outstanding Ordinary Shares even though such action resulted in the Standstill Parties’ beneficial ownership totaling more than the Standstill Limit; (b) directly or ~~other equity securities~~ indirectly, seek to have called any meeting of the ~~Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities~~ stockholders of the ~~Issuer) including pursuant~~ Company, propose or nominate for election to ~~a shareholder rights plan or similar plan or agreement, (iii) as a result~~ the Company’s Board of ~~the exercise (or exchange) of~~ Directors any ~~rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which~~ person whose nomination has not been approved by a majority of the ~~Non-Investor Directors.~~Company’s Board of Directors or cause to be voted in favor of such person for election to the Company’s Board of Directors any Then Outstanding Ordinary Shares; (bc) ~~Notwithstanding~~ directly or indirectly, encourage or support a tender, exchange or other offer or proposal by any other Person (an “Offeror”) the ~~provisions~~ consummation of ~~Section 1.1(a~~which would result in a Change of Control of the Company (an “Acquisition Proposal”); provided, ~~at any time following~~ however, that from and after the ~~earlier~~ filing of a Schedule 14D-9 (~~x) ten (10) days following the date any Third Party commences (within the meaning~~ or successor form of ~~Section 14(d)~~ Tender Offer Solicitation/Recommendation Statement under Rule 14d-9 of the Exchange Act) ~~a tender or exchange offer which, if consummated, would result in such Person becoming~~ by the ~~Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (~~Company recommending that stockholders accept any such offer, ~~a “Third Party Offer”), unless during such ten (10~~Investor shall not be prohibited from taking any of the actions otherwise prohibited by this Section 3.1(c) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as the Company maintains and does not withdraw such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretorecommendation; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, ~~any “solicitation” of “proxies”~~ solicit proxies or consents or become a participant in a solicitation (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) in opposition to ~~vote~~the recommendation of a majority of the Company’s Board of Directors with respect to any matter, or seek to advise or influence any ~~Person~~ Person, with respect to voting of any Then Outstanding Ordinary Shares; (e) deposit any Then Outstanding Ordinary Shares in a voting trust or ~~entity~~ subject any Then Outstanding Ordinary Shares to any arrangement or agreement with respect to the voting ofof such Then Outstanding Ordinary Shares; (f) propose (i) any merger, consolidation, business combination, tender or exchange offer, purchase of the Company’s assets or businesses, or similar transaction involving the Company or (ii) any ~~Issuer Common Stock~~ recapitalization, restructuring, liquidation or ~~any demand for a copy of Issuer’s stock ledger, list of stockholders or any~~ other ~~books and records of Issuer (other than~~ extraordinary transaction with respect to ~~matters related to~~ the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesCompany; (~~iii~~g) ~~call~~ act in concert with any Third Party to take any action in clauses (a) through (e) above, or ~~seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person~~“partnership, ~~in each case~~limited partnership, ~~with respect to the Issuer Common Stock~~syndicate, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (group” within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer;. (iih) ~~the Issuer solicits from one~~ enter into discussions, negotiations, arrangements or ~~more Persons, or enters into substantive discussions~~ agreements with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject any Person relating to the ~~obligations of the Investor under Section 3.2,~~ foregoing actions referred to in ~~the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either~~ (xa) ~~not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or~~ through (yf) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredabove; or (~~vii~~i) request or propose to the ~~Issuer~~ Company’s Board of Directors, any member(s) thereof or any ~~material Subsidiary shall~~ officer of the Company that the Company amend, waive, or consider the amendment or waiver of, any provisions set forth in this Section 3.1 (including this clause (i)); provided, however, that (A) ~~voluntarily commence any proceeding or file any petition seeking liquidation~~nothing contained in this Section 3.1 shall prohibit the Investor from making confidential, ~~reorganization or other relief under any federal~~non-public proposals to the Company for a transaction of the type described in the foregoing clauses (a) and (f) that would result in a Change of Control, ~~state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect,~~ and (B) ~~consent to~~ the ~~institution of,~~ mere voting in accordance with Section 5 hereof of any voting securities of the Company held by the Investor or ~~fail to contest in~~ its Affiliates shall not constitute a ~~timely and appropriate manner,~~ violation of any ~~proceeding or petition described in clause~~ of clauses (Aa) through (h) above. Notwithstanding the foregoing, if at any time during the Restricted Term the Company executes a transaction with any other Person that (Ci) ~~apply for or consent to~~ results in such Person becoming the ~~appointment~~ beneficial owner of ~~a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file~~ Then Outstanding Ordinary Shares and/or Ordinary Share Equivalents in an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is amount equal to or greater than ~~fifteen percent (15%),~~ the ~~Issuer agrees not to enter into any agreement regarding a (i) merger,~~ percentage of ownership represented by the Shares on the date hereof and (ii) ~~consolidation~~such transaction is a strategic collaboration or other strategic licensing arrangement with the Company, ~~(iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior~~ the Company shall offer to the ~~execution~~ Investor the opportunity to amend Section 3 and 5 of this Agreement in a manner such ~~agreement,~~ that such provisions would be consistent with the ~~Issuer has given Investor written notice of its intention~~ “standstill” and stockholder voting terms and conditions upon which the Company permitted such other Person to ~~enter into such agreement.~~ own and act (hor fail to act) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to ~~(x) a Change of Control Transaction or (y) a sale of a material portion of~~ the ~~Issuer’s assets outside~~ Company and the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the InvestorOrdinary Shares.

Appears in 1 contract

Samples: Investor Agreement (Wave Life Sciences Ltd.)

Standstill. Commencing as of the Effective Date and for so long as the Purchaser beneficially owns (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) at least 5% of the then outstanding Common Stock of the Company: (a) ~~From and after~~ Purchaser (including all Affiliates) shall not acquire or agree to acquire, publicly offer, or make any public proposal with respect to the ~~date hereof~~possible acquisition of "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of any voting securities of the Company, any securities convertible into or exchangeable for voting securities of the ~~Investor will not~~Company, ~~and will cause each Investor Affiliate not to~~or any other right to acquire voting securities of the Company, ~~directly or indirectly, acquire Beneficial Ownership~~ except by way of ~~shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options~~ stock dividends or other ~~derivative~~ distributions or offerings made available to holders of securities of the Company generally, from the Company or ~~contracts~~ any other person or ~~instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock~~entity, ~~if,~~ if after giving effect to such ~~acquisition~~acquisition of additional shares, the ~~Investor’s Investor~~ total beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Purchaser (together with all of its Affiliates) shall be greater than the Permitted Percentage ~~Interest would exceed~~ (as such term is defined in the ~~Cap~~Rights Agreement dated as of February 1, 1999 between the Company and American Stock Transfer & Trust Company, as Rights Agent, as amended) (the "BENEFICIAL OWNERSHIP LIMITATION") without the prior written consent of the Company, which consent may be withheld in its sole discretion; provided, however, that ~~such restriction on acquisitions will~~ it shall not be ~~applicable with respect to~~ a violation of the ~~acquisition by~~ prohibition contained in this Section 1.1(a) if Purchaser or any of its Affiliates shall exceed the ~~Investor Affiliates of~~ Beneficial Ownership ~~of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ Limitation solely as a result of ~~any stock splits, stock dividends~~ an acquisition or ~~other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders~~ retirement of ~~Issuer Common Stock (or other equity~~ shares of securities of the ~~Issuer)~~Company by the Company which, ~~including rights offerings~~ by reducing the number of shares outstanding, increases the proportionate number of shares of securities beneficially owned by Purchaser or any of its Affiliates, provided that Purchaser and ~~distributions made generally to holders~~ its Affiliates do not thereafter acquire beneficial ownership of ~~Issuer Common Stock (or other equity~~ additional shares of securities of the ~~Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of~~ Company while still exceeding the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors.Beneficial Ownership Limitation; and (b) ~~Notwithstanding~~ neither Purchaser nor any Affiliate shall (i) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" to vote (as such terms are used in the ~~provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ proxy rules of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to ~~advise~~ advise, encourage or influence any ~~Person~~ person or entity with respect to the voting ofof any shares of capital stock of the Company, ~~any Issuer Common Stock~~ initiate, propose or ~~any demand~~ otherwise solicit stockholders of the Company for ~~a copy~~ the approval of ~~Issuer’s stock ledger, list of stockholders~~ one or more stockholder proposals or induce or attempt to induce any other ~~books and records~~ individual, firm, corporation, partnership or other entity to initiate any stockholder proposal; (ii) deposit any securities of ~~Issuer~~ the Company having the right to vote generally in any election of directors of the Company (~~other than~~ "VOTING STOCK") into a voting trust or subject any shares of Voting Stock to any arrangement or agreement with respect to ~~matters related to~~ the ~~Investor’s exercise~~ voting of such securities, where the activities of such voting trust, arrangement or ~~enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ agreement would constitute a violation of the ~~Issuer Board and~~ terms of this Agreement; (iii) participate in a "13D Group" (as defined below) with respect to any ~~committees thereof in their capacity as~~ securities of the Company, where the activities of such or 13D Group would constitute a violation of the terms of this Agreement; (Biv) ~~the Investor Affiliates from opposing publicly or privately~~make any public announcement with respect to, or ~~voting against~~ submit a proposal for, or ~~encouraging others to vote against,~~ offer of (xwith or without conditions) any ~~proposal~~ business combination, merger, acquisition, restructuring, recapitalization, tender or exchange offer or other similar transaction involving the Company, or its securities or a material portion of its assets; (v) arrange, or in any way participate, directly or indirectly, in any financing of a third party ~~regarding a merger~~ for the purchase by such party of any voting securities or ~~other business combination involving~~ securities convertible or exchangeable into or exercisable for any voting securities, or assets of the ~~Issuer~~ Company, except for such securities or assets as are then being offered for sale by the Company or any ~~Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)Affiliates; or (vi) ~~enter into~~ make any ~~discussions~~ request or proposal to amend, waive or terminate any provision of this paragraph; or (vii) initiate any discussions, negotiations, arrangements or understandings with any third party with respect to the Company in connection with any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period matters referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or through (iivi) of above; provided, however, that nothing in this Section ~~1.1(f~~1.1(b), shall prohibit the Purchaser from: (x) ~~has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing~~ exercising its rights to ~~apply~~ designate members to the ~~Investor, then, in the event the transaction related to such matter has not occurred within six (6) months~~ Company's Board of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply Directors in accordance with ~~their terms, until terminated pursuant to~~ Section ~~1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ 8.1 of the ~~Issuer Common~~ Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting Purchase Agreement; or (y) ~~if so nominated are not so elected~~ voting its shares of Common Stock of the Company in favor of, or seeking to advise, encourage or influence any person or entity solely with respect to the ~~Issuer Board~~voting of any shares of capital stock of the Company in favor of, the election of the members designated in accordance with Section 8.1 of the Stock Purchase Agreement or the ~~Issuer otherwise breaches its obligations under Article 3; (iv)~~ matters recommended by the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect Board of Directors of the ~~Issuer~~ Company in the proxy statement referenced in Section 8.3 of the Stock Purchase Agreement. Each party agrees to promptly advise the other party of any inquiry or ~~any material Subsidiary~~ proposal made by or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering to it with respect to any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsforegoing. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Standstill Agreement (Triangle Pharmaceuticals Inc)

Standstill. ~~(a) From~~ Mutual hereby covenants and ~~after~~ agrees that, on or before the fifth anniversary of the date hereof, ~~the Investor~~ it will not, and will cause ~~each Investor Affiliate not to~~Mutual Affiliates to not, ~~directly~~ without the prior written consent of a majority of the members of the Company's Board of Directors, do any of the following except pursuant to Section 2 hereof: (a) acquire, offer or ~~indirectly,~~ agree to acquire ~~Beneficial Ownership of~~ any shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (ior options or warrants to acquire, or securities convertible into or exchangeable for, shares of Common Stock) ~~pursuant to the Purchase Agreement (unless~~if, ~~for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ as a result of such acquisition, Mutual (together with any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the IssuerMutual Affiliates) as would Beneficially Own more than a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of ~~Issuer~~ Common Stock ~~tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than~~ in excess of a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five forty percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (3540%) of the outstanding shares of ~~Issuer~~ Common Stock ~~or thirty-five~~ plus forty percent (3540%) of the ~~voting power~~ shares of Common Stock issuable upon conversion of the ~~Issuer, and either~~ Convertible Notes plus forty percent (140%) ~~the Issuer Board recommends that the stockholders~~ of the ~~Issuer tender their~~ number of shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of Common Stock issuable upon conversation of the ~~Issuer tender~~ Preferred Stock; provided, however, that, for purposes of computing such amount, the 29,800 shares of Common Stock Beneficially Owned by Invista Capital Management, Inc. ("Invista") on November 3, 1997 shall be excluded from such calculation for as long as such shares are regarded as Beneficially Owned by Invista (and no longer) and provided that no executive officer or director of Mutual or Principal or any employee of Mutual, Principal, or any of their affiliates other than officers, directors or employees of Invista charged with the responsibility thereof shall participate in the voting of such shares and provided further that for so long as the Convertible Notes are outstanding, Mutual and the Mutual Affiliates, in ~~response to such offer~~the aggregate, will not vote or act on written consent in any matter coming before shareholders at any shareholder meeting or shareholder action in excess of forty percent (40%) of the shares of Common Stock outstanding plus forty percent (40%) of the shares of Preferred Stock outstanding; (iib) directly or indirectly commence or participate in a solicitation of proxies either to oppose the ~~Issuer solicits~~ election of any Person to the Board of Directors or to seek the removal of any Person from ~~one or more Persons~~the Board of Directors, ~~or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or~~ which Person has been nominated by the ~~Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ Nominating Committee of the ~~Issuer Board~~Board of Directors; (~~iii~~c) ~~subject~~ vote its shares of Common Stock for the election of any Person to the ~~obligations~~ Board of Directors other than the Persons nominated by the Nominating Committee of the ~~Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer~~ Board ~~as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate~~ of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredDirectors; or (~~vii~~d) directly or indirectly make or solicit or assist any third party to make a tender or exchange offer to purchase any shares of Common Stock or make any public announcement concerning, or submit any written proposal to the ~~Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation~~Board of Directors of the Company for a merger, ~~reorganization or other relief under any federal~~share exchange, ~~state or foreign bankruptcy, insolvency, receivership~~ acquisition of substantially all of the assets or similar ~~Law now or hereafter in effect, (B) consent to~~ transaction involving the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsCompany. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Shareholders' Agreement (Coventry Corp)

Standstill. (a) ~~From~~ Each Purchaser covenants to and ~~after~~ agrees with the ~~date hereof~~Company that, without the ~~Investor will not~~Company’s prior written consent, ~~and will cause each Investor Affiliate not to~~neither such Purchaser nor any of its Affiliates will, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership indirectly until the date that ~~derive their value~~ is ninety (~~in whole or in part~~90) ~~from such Issuer Common Stock, if,~~ days after ~~giving effect to such acquisition,~~ the ~~Investor’s Investor Percentage Interest would exceed~~ Closing Date (the ~~Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock~~ “Standstill Period”): (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any ~~manner, directly or indirectly: (i) enter into or agree, effect or seek~~way acquire, offer or propose to acquire or agree to acquire legal title to or Beneficial Ownership of any Company Securities; (~~whether publicly or otherwise~~ii) ~~to effect~~make any public announcement with respect to, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except submit to the ~~extent otherwise specifically permitted by this Agreement~~Company or any of its directors, officers, representatives, trustees, employees, attorneys, advisors, agents or Affiliates, any proposal for the acquisition of any ~~Issuer Common Stock (~~Company Securities or ~~Beneficial Ownership thereof)~~ with respect to any merger, consolidation, business combination, restructuring, recapitalization or purchase of any ~~material~~ substantial portion of the assets of ~~Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any~~ the Company of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; , in which such Purchaser and its Affiliates are involved, and whether or not such proposal might require the making of a public announcement by the Company unless the Company shall have made a prior written request to such Purchaser to submit such a proposal; (iiiii) ~~except as provided~~ seek or propose to influence, advise, change or control the management, the board of directors of the Company, governing instruments or policies or affairs of the Company by way of any public communication or communication with any Person other than the Company, or make, or in ~~Article 3, make or~~ any way participate in~~, directly or indirectly~~, any “solicitation” of “proxies” (as such terms are defined ~~under~~ or used in Regulation 14A under the Exchange Act) to ~~vote,~~ vote any Company Securities or ~~seek to advise or influence~~ become a “participant” in any ~~Person or entity~~ “election contest” as such terms are defined and used in Rule 14a‑11 under the Exchange Act) with respect to ~~the voting of~~Company Securities; provided, ~~any Issuer Common Stock~~ however, that nothing in this clause (iii) shall prevent such Purchaser or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor its Affiliates from ~~opposing publicly or privately, or voting against or encouraging others to vote against,~~ (x) voting in any ~~proposal of a third party regarding a merger~~ manner any Company Securities over which such Purchaser or ~~other business combination involving the Issuer or any Subsidiary thereof~~ such Affiliates has Beneficial Ownership or (y) ~~other similar corporate transaction on which a vote~~ communicating privately with shareholders of the ~~Issuer’s stockholders~~ Company to the extent such communication does not constitute a “solicitation” of “proxies,” as such terms are defined or used in Regulation 14A under the Exchange Act and the number of persons with whom such Purchaser communicates is ~~required~~ fewer than ten (10); or (iv) make a request to amend or waive any provision of this Section 5.5(a). Notwithstanding the above provisions under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each casethis Section 5.5(a), with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each ~~case, to exercise its rights~~ case under ~~Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause~~ items (i) – (iii) above; , if at any time the Company issues any Company Securities (~~v) bring~~ except for any ~~action,~~ Company Securities issued or ~~otherwise act,~~ granted pursuant to ~~contest~~ the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any~~ employee share incentive plan of the ~~foregoing (except~~ Company existing as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the ~~Restricted Period. For the avoidance of doubt, any tolling of~~ date hereof (but such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) exception shall not apply ~~(and~~ to any future amendments which may be made to such plan)) or sells any treasury ADSs, each Purchaser shall have the ~~Investor will be permitted~~ right to ~~take~~ acquire such number of Company Securities in order to maintain the ~~actions otherwise prohibited thereunder) if any of the following occurs (provided, that,~~ same percentage ownership it owns in the ~~event any matter described~~ Company prior to such issuance or sale of such Company Securities or 18 treasury ADSs (as applicable) (on a fully diluted and as converted basis as defined in ~~clauses~~ the Exhibit C). (ib) ~~or (ii)~~ For purposes of this ~~Section 1.1(f) has occurred and resulted~~ Agreement, a Person shall be deemed to have “Beneficial Ownership” of any securities in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group respect of which such ~~third party~~ Person or any such Person’s Affiliates is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor considered to be ~~elected or appointed to~~ a “Beneficial Owner” under Rule 13d-3 under the ~~Issuer Board~~ Exchange Act as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect ~~or (y)~~ on the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsdate hereof. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Subscription Agreement

Standstill. (a) ~~From~~ Each of the Facility Lenders and ~~after~~ the ~~date hereof~~Existing Lender agrees, subject to the ~~Investor will~~ terms of this Agreement, that for the Standstill Period, it shall not: (i) file or join in the filing of any involuntary petition in bankruptcy with respect to the Company or its Subsidiaries, ~~and will cause each Investor Affiliate not to, directly~~ or ~~indirectly, acquire Beneficial Ownership~~ initiate or participate in any similar proceedings for the benefit of ~~shares of Issuer Common Stock~~creditors, including any proceeding for ~~purposes~~ the appointment of a trustee, receiver, conservator or liquidator of the Company or its Subsidiaries or any portion of its assets; (ii) seek to collect or enforce by litigation or otherwise, any payment obligations under the Existing Loan Documents or the Loan Documents; provided that nothing in this Section ~~1.1(a), rights, options~~ 1 shall prohibit the Facility Lenders from exercising their Exchange Option; (iii) make any Margin Calls or other ~~derivative securities~~ demands for payment in respect of, or ~~contracts or instruments~~ additional collateral to ~~acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition,~~ secure the ~~Investor’s Investor Percentage Interest would exceed the Cap~~Existing Obligations; provided, however, that ~~such restriction on acquisitions will~~ this clause shall not ~~be applicable with respect to~~ adversely affect the ~~acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation~~ right of the ~~Investor~~ Existing Lender to take any actions to preserve, protect or perfect its liens in ~~Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by~~ the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, Collateral; (iv) ~~in accordance with~~ declare a ~~Permitted Offer~~ default or event of default under, or exercise or enforce any right or remedy under, or accelerate the maturity of any Existing Obligation or Loan under, any Existing Loan Document or Loan Document; or (v) ~~which has been approved by a majority~~ seek to attach, sequester or otherwise proceed against any of the ~~Non-Investor Directors~~Collateral. (b) ~~Notwithstanding~~ The Standstill Period may be terminated by the ~~provisions~~ Existing Lender or the Facility Lenders by written notice to the Company and each other Creditor upon the occurrence of ~~Section 1.1(a), at~~ any ~~time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”):following: (i) ~~is commenced and made in accordance with~~ a failure by the ~~applicable rules and regulations~~ Company under the ~~Exchange Act applicable~~ Existing Loan Agreement to ~~tender~~ make to the Existing Lender any scheduled payment of interest, which failure continues unremedied for two days, or ~~exchange offers, including, if applicable, Section 13(e)-3~~ any payment of principal due in respect of payoffs or prepayments of mortgage loans comprising any portion of the ~~Exchange Act and the related rules and regulations applicable thereto~~Collateral]; (ii) ~~is made to all holders of Issuer Common Stock~~any intentional fraud or misrepresentation by the Company; (iii) ~~will expire no earlier than midnight~~immediately upon a failure of the Facility Lenders to make an Advance (as defined in the Loan Agreement) under the Loan Agreement following a request of the Company thereunder; (iv) immediately in the event any Other Existing Lender takes any of the actions described in Section 1(a) of its Other Intercreditor Agreement, whether or not it shall have given notice of termination of the Standstill Period; (v) the Company shall not have entered into the Loan Agreement in substantially similar form to the October 13, 1998 draft thereof at or before 12:00 noon, New York City Time, on October 14, 1998; (vi) the conditions to the obligations of the Facility Lenders to fund the Initial Advance shall not have been satisfied or waived by the Facility Lenders and the Facility Lenders, if requested by the Company to fund the Initial Advance, shall not have funded the Initial Advance at or before 12:00 noon, New York City time, on ~~the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act)~~October 14, 1998; (ivvii) the Company shall not have delivered (by facsimile transmission or otherwise in accordance with Section 16 hereof) to each Creditor a forbearance agreement of BankBoston at or before 12:00 noon, New York City time, on October 14, 1998, which is ~~subject~~ satisfactory in substance and form to ~~customary conditions~~ each Creditor; (viii) the condition contained in clause (y) of the definition of "Standstill Period" to the ~~obligation~~ extension of the ~~Investor Affiliates to purchase Issuer Common Stock; provided, that,~~ Standstill Period beyond the date which is 45 days from and after the date hereof shall not have been satisfied on or before such date; (Aix) ~~in the event~~ a ~~Permitted Offer is made pursuant to clause (z)~~ Change of ~~Section 1.1(b) and no Third Party Offer is commenced~~ Control or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority payment of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum ConditionTake-out Premium; and (vx) ~~provides~~ an event shall occur and be continuing for ~~consideration payable in cash~~a period of ten Business Days which permits any holder of indebtedness for borrowed money of the Company or any Subsidiary outstanding (other than any Creditor) to accelerate the maturity of such indebtedness or exercise remedies with respect to property of the Company or any Subsidiary, ~~common stock~~ without such indebtedness being paid or the rights of such holder to take such action being waived, stayed or subjected to a standstill or other ~~securities~~ agreement of ~~the Investor or a Subsidiary thereof~~such holder to forbear from exercising remedies, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior reasonably satisfactory to the ~~earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer~~Creditors. (c) In The Standstill Period shall terminate automatically without notice or other action by any Creditor upon the ~~event~~ occurrence of any of the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectlyfollowing: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer Company or any Subsidiary ~~thereof~~ shall consent to the appoint ment of or taking possession by a receiver, assignee, custodian, sequestrator, trustee or liquidator (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger~~ or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (iiofficial) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its ~~assets~~property; or the Company or any Subsidiary shall admit in writing (to any creditor, ~~under any federal~~governmental authority or judicial court or tribunal) its inability to pay its debts generally as they come due or shall fail generally to pay its debts as they become due, ~~state~~ or ~~foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of~~ shall make a ~~receiver, trustee, custodian, sequestrator, conservator or similar official~~ general assignment for the ~~Issuer~~ benefit of its creditors; or the Company or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall ~~(A) voluntarily commence any proceeding~~ file a voluntary petition in bankruptcy or ~~file any~~ a voluntary petition or answer seeking liquidation, reorganization or other relief with respect to itself or its debts under ~~any federal~~the Federal bankruptcy laws, ~~state or foreign bankruptcy, insolvency, receivership or similar Law~~ as now or hereafter ~~in effect~~constituted or any other applicable Federal or State bankruptcy, ~~(B)~~ insolvency or other similar law, or shall consent to the ~~institution of,~~ entry of an order for relief in an involuntary case under any such law; or ~~fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to~~ the ~~appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer~~ Company or any ~~material~~ Subsidiary ~~or for a substantial part of its assets, (D)~~ shall file an answer admitting the material allegations of a petition filed against it the Company in any such proceeding, or ~~(E) make a general assignment~~ otherwise seek relief under the provisions of any existing or future Federal or State bankruptcy, insolvency or other similar law providing for the ~~benefit~~ reorganization or winding-up of corporations, or providing for an arrangement, agree ment, composition, extension or adjustment with its creditors.; or the Company or any Subsidiary shall take or publicly announce its intention to take corporate action in furtherance of any of the foregoing; or ~~(g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger,~~ (ii) ~~consolidation~~an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction appointing, without the consent of the Company, a receiver, trustee or liquidator of the Company or any Subsidiary or of any substantial part of its property, or any substantial part of the property of the Company or any Subsidiary shall be sequestered, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed, unstayed or unvacated for a period of 30 days after the date of entry thereof; or (iii) ~~Change of Control Transaction~~an involuntary petition against the Company or any Subsidiary in a proceeding under the Federal bankruptcy laws or other insolvency laws, as now or hereafter in effect, shall be filed and shall not be withdrawn or dismissed within 30 days thereafter, or ~~(iv) other business combination transaction unless~~a decree or order for relief in respect of the Company or any Subsidiary shall be entered by a court of competent jurisdiction in an involuntary case under the Federal bankruptcy laws, ~~in each case~~as now or hereafter constituted, ~~at least ten (10) days prior to the execution of such agreement~~or, ~~the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding~~ under the provisions of ~~Section 1.1(d)~~any law providing for reorganization or winding-up of corporations which may apply to the Company, ~~and so long as the Investor Percentage Interest is equal to~~ any court of competent jurisdiction shall assume jurisdiction, custody or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion control of the ~~Issuer’s assets outside the ordinary course~~ Company or any Subsidiary or of ~~business~~ any substantial part of its property and such jurisdiction, custody or ~~(ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g)~~control shall remain in force unrelinquished, ~~in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board~~ unstayed or ~~management~~ unterminated for a period of ~~the Issuer with respect to such proposed transaction or a competing proposal by the Investor~~30 days.

Appears in 1 contract

Samples: Intercreditor Agreement (Imc Mortgage Co)

Standstill. (a) ~~From and~~ Except as provided in Section 4.1(b), from the Closing until three months after no DSM Nominee serves on the ~~date hereof~~Board (the “Standstill Period”), ~~the Investor will~~ DSM shall not, ~~and will cause each Investor Affiliate not~~ nor shall it permit DSM Parent or any of its other Subsidiaries or controlled Affiliates to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, without the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation prior consent of the ~~Investor in Section 4.2(d) hereof is not true and correct),~~ Company (~~ii) as~~ acting through a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities resolution of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Company’s Non-~~Investor~~ DSM Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) ~~is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable~~ acquire or agree to acquire, whether by purchase, tender or exchange ~~offers~~offer, ~~including~~by forming, ~~if applicable~~joining or otherwise participating in a partnership, ~~Section 13(e)-3~~ syndicate or other Group, through the use of a derivative instrument or voting agreement, or otherwise, (A) Beneficial Ownership of additional Voting Securities or Convertible Securities after the Closing that would result in DSM Parent (together with its Subsidiaries or controlled Affiliates and any parties acting as members of a Group with DSM), having Beneficial Ownership of more than 33.0% in the aggregate of the ~~Exchange Act~~ shares of Voting Securities outstanding at such time (assuming (1) the exercise of all of then-outstanding Warrants for the maximum number of shares of Common Stock issuable thereunder, regardless of whether such Warrants are then exercisable, and (2) the ~~related rules~~ conversion of the Shares for the maximum number of shares of Common Stock issuable thereunder, regardless of whether such Shares are then convertible, which number of shares shall be included in the numerator and ~~regulations applicable thereto~~denominator for purposes of determining the percentage of Voting Securities Beneficially Owned by DSM Parent (together with its Subsidiaries and controlled Affiliates and any parties acting as members of a Group with DSM) for purposes of this clause (A)), except pursuant to Section 4.2 of this Agreement, pursuant to the exercise of the Warrants, pursuant to the Prior Securities Purchase Agreement or the Securities Purchase Agreement or pursuant to the Company’s Certificate of Designation of Preferences, Rights and Limitations of Series B 17.38% Convertible Preferred Stock, or (B) any direct or indirect ownership interest in any indebtedness or debt securities of the Company or any of its Subsidiaries, except pursuant to Section 4.2 of this Agreement; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) ~~in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding~~make, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate inparticipate, directly or indirectly, in any “solicitation” of “proxies” (as such terms are ~~defined under Regulation 14A under~~ used in the ~~Exchange Act~~rules of the SEC) to ~~vote~~vote Voting Securities, or (B) seek to advise or knowingly influence any Person ~~or entity~~ with respect to the voting ~~of,~~ of any ~~Issuer Common Stock~~ Voting Securities or (C) deposit any ~~demand for a copy of Issuer’s stock ledger, list of stockholders~~ Voting Securities in any voting trust or subject any ~~other books and records of Issuer (other than~~ Voting Securities to any arrangement or agreement with respect to ~~matters related to~~ the ~~Investor’s exercise or enforcement~~ voting of ~~rights under the Purchase Agreement)~~any Voting Securities, except ~~that~~ for this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesAgreement; (iii) ~~call~~ make any public announcement of a proposal or ~~seek to call a meeting of Issuer’s stockholders~~ offer (with or ~~initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case,~~ without conditions) with respect to any extraordinary transaction involving DSM Parent or its Subsidiaries or controlled Affiliates and the ~~Issuer Common Stock~~Company including, without limitation, any tender offer, merger, consolidation or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B)business combination; (iv) effect or seek to effect any recapitalization, reclassification, liquidation or dissolution of the Company; (v) publicly disclose any intention, plan or arrangement by DSM regarding the possibility of any of the events described in clauses (i) through (iv) above; (vi) knowingly take any action that would require either the Company or DSM under applicable law or the rules of the principal exchange on which ~~would~~ the Company’s Common Stock is then listed or ~~would reasonably be expected to force Issuer~~ traded to make a public announcement regarding the possibility of any of the ~~types of matters set forth~~ events described in ~~clause~~ clauses (i) through (iv) above~~; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)~~; or (vivii) enter into any ~~discussions~~ discussions, negotiations, agreements or ~~arrangements~~ understandings with any other third ~~party~~ Person (excluding DSM’s advisors) with respect to any of the ~~foregoing (except as otherwise expressly provided herein)~~foregoing. (eb) ~~Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~Notwithstanding the foregoing, the ~~provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such~~ restrictions ~~pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth~~ contained in Section ~~1.1(d) (other than the provisions of Section 1.1(d)(i)~~4.1(a) shall not (1) apply with respect to the designations of the DSM Nominees in accordance with this Agreement, (~~and~~ 2) prevent a DSM Director from taking any action in his or her capacity as a director of the ~~Investor will be permitted to take the actions otherwise prohibited thereunder~~Company, (3) if prohibit DSM Parent or any of its Subsidiaries or controlled Affiliates from voting its Voting Securities in its discretion, (4) apply to the ~~following occurs~~ acquisition of securities in or control of another Person (~~provided, that, in the event any matter described in clauses (i~~including by way of merger or consolidation) or (ii5) ~~of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to~~ apply to ~~the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months~~ any acquisitions or investments by any bona fide employee benefit plan of ~~the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time~~DSM Parent or its Subsidiaries or controlled Affiliates. In addition, the restrictions ~~set forth~~ contained in Section ~~1.1(d~~4.1(a) shall ~~thereafter resume and continue~~ not prevent a private communication to ~~apply in accordance with their terms, until terminated pursuant~~ the Board to ~~Section 1.1(e) or subsequently made inapplicable pursuant~~ the extent that such private communication would not reasonably be expected to ~~this Section 1.1(f)): (i) in~~ require a public disclosure prior to any public announcement by the ~~event~~ Company that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party it (or ~~any 13D Group of which such third party is a member~~its Board) ~~becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock~~ has approved or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters entered into ~~substantive discussions with one or more Persons regarding, a proposal~~ an agreement with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the InvestorFundamental Transaction.

Appears in 1 contract

Samples: Stockholder Agreement (Amyris, Inc.)

Standstill. Plaintiff agrees that during the Standstill Period (as hereinafter defined): (a) ~~From and after the date hereof, the Investor~~ Plaintiff will not, and will cause ~~each Investor Affiliate~~ his Affiliates (as hereinafter defined) not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchangehereinafter defined) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of ~~Issuer Common Stock pursuant to a tender~~ common stock or ~~exchange offer so long as such tender~~ common stock equivalents or ~~exchange offer (such tender or exchange offer meeting~~ the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is madeCorporation, in each case, ~~during~~ now or hereafter outstanding (collectively, “Securities”) without the ~~pendency~~ consent of the Corporation, if the effect of such ~~Permitted Offer,~~ acquisition would be to increase the ~~Minimum Condition; and (v) provides for consideration payable in cash,~~ aggregate Beneficial Ownership of Securities of Plaintiff to greater than 4.99% of the total number of shares of Corporation common stock ~~or other securities of~~ then outstanding (the ~~Investor or a Subsidiary thereof~~“Percentage Limitation”). In addition, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor Plaintiff will not, and will cause ~~each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate~~ his Affiliates not to, in make any ~~manner~~public announcement with respect to, ~~directly~~ or ~~indirectly:~~ submit any proposal for or with respect to (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the ~~extent otherwise specifically permitted by this Agreement, any~~ acquisition of ~~any Issuer Common Stock (or~~ Beneficial Ownership ~~thereof~~of any Securities if the effect of such acquisition would be to cause the Beneficial Ownership of Plaintiff and his Affiliates to exceed the Percentage Limitation. For purposes of this Section, the term “Affiliates” shall have the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “Beneficial Ownership” shall be determined in accordance with Rule 13d-3 under the Exchange Act. (b) ~~or any material portion~~ Without the express prior written approval of the ~~assets~~ Board of ~~Issuer~~ Directors of the Corporation (the “Board”), Plaintiff will not, and ~~its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does~~ will cause his Affiliates not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate into, directly or indirectly, ~~any~~ solicit proxies or initiate, propose or become a “participant” in a “solicitation~~” of “proxies~~” (as such terms are defined ~~under~~ in Regulation 14A under the Exchange Act) ), in opposition to ~~vote,~~ any matter that has been recommended by a majority of the members of the Board or in favor of any matter that has not been approved by the Board or seek to ~~advise~~ advise, encourage or influence any ~~Person or entity~~ “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, “Person”) with respect to the voting ofof Securities in such manner, or initiate, or induce or attempt to induce any Person to initiate, any ~~Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related~~ shareholder proposal relating to the ~~Investor’s exercise~~ Corporation. (c) Without the express prior written approval of the Board, Plaintiff will not, and will cause his Affiliates not to, join a consortium, partnership, limited partnership, syndicate or ~~enforcement~~ other “group” (within the meaning of ~~rights under~~ Section 13(d)(3) of the ~~Purchase Agreement~~Exchange Act), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, ~~in each case~~for the purpose of acquiring, ~~with respect to the Issuer Common Stock~~holding, voting or disposing of Securities, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and for any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action other purpose which would ~~or would reasonably be expected to force Issuer to make a public announcement regarding any~~ require disclosure under Item 4 of Schedule 13D adopted by the ~~types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest~~ Securities and Exchange Commission under the ~~validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein)~~Exchange Act. (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (fd) The ~~restrictions set forth in Section 1.1(d) (other than~~ “Standstill Period” shall commence on the ~~provisions of Section 1.1(d)(i))~~ Effective Date and shall ~~not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided~~terminate on December 31, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors2018. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Banc of California, Inc.)

Standstill. ~~(a) From and after~~ Prior to the ~~date hereof~~Termination Date, except as contemplated by this Agreement, without the ~~Investor will~~ prior written consent of the Board, each of the CMS Parties agrees that it shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its Representatives not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (a) (i) ~~enter into~~ acquire, offer or ~~agree~~agree to acquire, or acquire rights to acquire (except by way of stock dividends or other distributions or offerings made available to holders of voting securities of the Company generally on a pro rata basis), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any voting securities of the Company or any voting rights decoupled from the underlying voting securities which would result in the CMS Parties and its Representatives (together with any other person or group) owning, controlling or otherwise having any beneficial ownership interest in 5% or more of the then-outstanding shares of the Common Stock; or (ii) knowingly sell, offer or agree to sell, all or substantially all, directly or indirectly, through swap or hedging transactions or otherwise, the voting securities of the Company or any voting rights decoupled from the underlying voting securities held by the CMS Parties and its Representatives to any Third Party which would result in such Third Party, together with its Representatives, having any beneficial ownership interest of 5% or more of the then-outstanding shares of Common Stock; provided, however, that open market sales of securities through a broker by any of the CMS Parties which are not actually known to any of the CMS Parties to result in any transferee acquiring a beneficial ownership interest of 5% or more of the then-outstanding shares of Common Stock shall not be included in this clause (ii) or constitute a breach of this Section 5; (b) (i) nominate or recommend for nomination any person for election to the Board or engage, or in any way participate in any solicitation of proxies or consents in any election contest with respect to the Company’s directors; (ii) seek to advise, encourage or influence any person or entity with respect to the voting of any voting securities of the Company in any election or removal contest with respect to the Company’s directors, including any “withhold” or similar campaign; (iii) initiate, propose or otherwise solicit shareholders of the Company for the approval of shareholder proposals in connection with the election or removal of directors of the Company; or (iv) induce or attempt to induce any other person or entity to initiate any such shareholder proposal; (c) form, join or in any way participate in any group with respect to any voting securities of the Company in connection with any election or removal contest with respect to the Company’s directors; (d) deposit any Company voting securities in any voting trust or subject any Company voting securities to any arrangement or agreement with respect to the voting thereof; (e) seek, alone or in concert with others, to (i) call a Shareholders Meeting or solicit consents from shareholders; (ii) obtain representation on the Board; (iii) effect the removal of any member of the Board; (iv) make a shareholder proposal at any Shareholders Meeting; or (v) amend any provision of the Company’s certificate of incorporation or bylaws; (f) demand an inspection of the Company’s records pursuant to Section 00-00-000 of the Tennessee Business Corporation Act or otherwise; (g) effect or ~~seek~~seek to effect (including by entering into any discussions, negotiations, agreements or understandings whether or not legally enforceable with any person), offer or propose ~~(whether publicly or otherwise)~~ to effect, ~~or announce any intention to effect or~~ cause or participate ~~in or~~ in, in any way ~~assist,~~ assist or facilitate ~~or encourage~~ any other ~~Person~~ person to effect or seek, or offer or propose ~~(whether publicly or otherwise)~~ to effect or participate in: , (Ai) ~~except to the extent otherwise specifically permitted by this Agreement,~~ any acquisition of 5% or more of any ~~Issuer Common Stock (or Beneficial Ownership thereof)~~ securities, or any material ~~portion~~ assets or businesses, of the ~~assets~~ Company or any of ~~Issuer and~~ its ~~Subsidiaries (taken together)~~subsidiaries; (Bii) any tender offer or exchange offer, ~~merger~~ merger, acquisition, share exchange or other business combination involving ~~Issuer~~ 5% or more of any of the voting securities or any of the material assets or businesses of the Company or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination)subsidiaries; or (Ciii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries;~~ subsidiaries or any material portion of its or their businesses; provided, however, that open market sales of securities through a broker by any of the CMS Parties which are not actually known to any of the CMS Parties to result in any transferee acquiring a beneficial ownership interest of 5% or more of the then-outstanding shares of Common Stock shall not be included in this clause (ii) ~~except as provided in Article 3~~or constitute a breach of this Section 5; or (h) enter into any negotiations, ~~make~~ agreements or ~~participate in, directly or indirectly,~~ understandings with any ~~“solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity~~ Third Party with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privatelyforegoing, or ~~voting against or encouraging others to vote against~~advise, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call assist, encourage or seek to ~~call a meeting of Issuer’s stockholders or initiate~~ persuade any ~~stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect~~ Third Party to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the ~~foregoing (except as~~ foregoing, or otherwise ~~expressly provided herein). (e) Unless earlier terminated~~ take or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, cause any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if action inconsistent with any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsforegoing. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Settlement Agreement (Miller Energy Resources, Inc.)

Standstill. XxXxxxxxxx agrees that during the Standstill Period (a) From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(aas hereinafter defined), ~~rights~~XxXxxxxxxx and his affiliates [as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, ~~options or other derivative securities or contracts or instruments to acquire such ownership that derive their value~~ as amended (~~in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition,~~ the ~~Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions~~ "Exchange Act")] will not ~~be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock~~ (~~i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is~~ and he and they will not ~~true and correct~~assist or encourage others to), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (ia) ~~enter into~~ Acquire or agree, ~~effect or~~ offer, seek, ~~offer~~ request permission or propose to acquire, or cause to be acquired (~~whether publicly~~ by merger, tender offer, purchase, statutory share exchange or otherwise~~) to effect~~), ~~or announce any intention to effect or cause or participate~~ ownership (including, but not limited to, beneficial ownership as defined in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A Rule 13d-3 under the Exchange Act) ~~to vote, or seek to advise or influence~~ of any ~~Person or entity with respect to~~ of the ~~voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ Company's assets (other than ~~with respect to matters related to~~ acquisitions of inventory in the ~~Investor’s exercise~~ ordinary course of business) or ~~enforcement~~ businesses or any voting stock that would result in beneficial ownership by you and your affiliates of ~~rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ voting stock of the ~~Issuer Board and any committees thereof~~ Company in ~~their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal~~ excess of ~~a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ 4% of the ~~Issuer’s stockholders is required under Delaware Law~~ total voting power of the outstanding shares of stock of the Company in the aggregate, for which purpose any rights or ~~Nasdaq rules;~~ options (~~iii~~including without limitation convertible securities) ~~call or seek~~ to ~~call a meeting~~ acquire such ownership of ~~Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders~~voting stock shall constitute beneficial ownership of such voting stock, ~~form, join or in any way participate in a 13D Group or otherwise act in concert with any Person~~regardless of when they are exercisable (except, in each ~~case~~event, ~~with respect~~ pursuant to any proposal expressly solicited by the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members Chief Executive Officer of the ~~Issuer Board~~ Company, and ~~any committees thereof~~ in ~~their capacity as~~ such ~~and (y)~~ event such proposal shall not be pursued by you or your affiliates if you are hereafter advised by the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any Chief Executive Officer of the ~~types~~ Company that the Company is no longer interested in pursuing such proposal, provided, however, that nothing contained herein shall preclude you from orally contacting the Chief Executive Officer of ~~matters set forth~~ the Company to inform him that you are interested in ~~clause (i) above; (v) bring any action, or otherwise act,~~ pursuing such a proposal if invited to ~~contest~~ do so by the ~~validity~~ Chief Executive Office of ~~this Section 1.1(d~~the Company); or (vib) seek or propose to influence or control the management or policies of the Company or to obtain representation on the Company's Board of Directors, or solicit, or participate in the solicitation of, proxies or consents with respect to any securities of the Company in connection with the election of directors or any other matter or disclose to the public by press release or other communication its or their position concerning the election of directors or any other matter to be considered by the shareholders of the Company, or request permission to do any of the foregoing; or (c) make any other public announcement with respect to any of the foregoing; or (d) enter into any ~~discussions~~ discussions, negotiations, arrangements or ~~arrangements~~ understandings with any third party with respect to any of the ~~foregoing (except as otherwise expressly provided herein).~~foregoing; or (e) ~~Unless earlier terminated~~ contact any employee, representative, agent, or ~~made inapplicable pursuant to Section 1.1(f),~~ Board member of the ~~provisions of Section 1.1(d) (~~Company other than the ~~provisions~~ Company's Chief Executive Officer to request that the Company, directly or indirectly, waive or amend any provision of ~~Section 1.1(d)(i)) will terminate upon~~ this paragraph 13. As used herein, the ~~expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of~~ Standstill Period means the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months commencing as of the date ~~on which~~ hereof and terminating one year from the ~~Investor was released from such restrictions, then so long~~ date hereof. XxXxxxxxxx covenants that as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the ~~Issuer Common Stock is commenced (within the meaning~~ date hereof neither he nor any of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof his affiliates are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, engaged in any ~~such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering~~ discussions regarding any ~~of the foregoing shall be entered; or (vii) the Issuer or~~ acquisition proposal and that any ~~material Subsidiary shall (A) voluntarily commence~~ prior discussions regarding any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsacquisition proposal have been terminated. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Separation and Consulting Agreement (Minntech Corp)

Standstill. Seller agrees that for a period of fifteen (a15) ~~From and~~ months after the date ~~hereof~~of this Agreement, so long as (i) this Agreement has not been terminated pursuant to the ~~Investor will~~ breach of Purchaser or (ii) Seller has not been required to return the Purchase Price to the Company pursuant to any bankruptcy, insolvency or other judicial proceeding, Seller shall not, and ~~will~~ shall cause each ~~Investor Affiliate~~ of its officers, directors, majority-owned subsidiaries and affiliates for which Seller or a direct or indirect parent of Seller has voting or effective control not to, unless and until such party shall have received the prior written invitation or approval of a majority of directors of Purchaser, directly or ~~indirectly~~indirectly (i) acquire, agree to acquire ~~Beneficial Ownership~~ or make any proposal to acquire any securities of ~~shares of Issuer Common Stock~~Purchaser, ~~including~~ any warrant or option to acquire any such securities, any security convertible into or exchangeable for ~~purposes of this Section 1.1(a), rights, options or other derivative~~ any such securities or ~~contracts or instruments~~ any other right to acquire any such ~~ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap~~securities; provided, however, that ~~such restriction~~ each of the K-1 Directors shall be permitted to exercise, in accordance with their terms, any options to purchase Purchaser's Common Stock he or she has received pursuant to their appointment or service on ~~acquisitions will not be applicable with respect~~ Purchaser's Board of Directors, subject to ~~the acquisition~~ any lock-up or other restrictions imposed by the ~~Investor Affiliates~~ Company on Purchaser's Board of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to~~ Directors in connection with the ~~Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct)~~Fund Raising, (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer seek or propose ~~(whether publicly or otherwise) to effect~~any merger, ~~or announce any intention to effect or cause or participate in or in any way assist~~consolidation, ~~facilitate or encourage any other Person to effect or seek~~business combination, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, ~~merger~~ sale or ~~other business combination~~ purchase of assets or securities, dissolution, liquidation, restructuring, recapitalization or similar transactions of or involving ~~Issuer~~ Purchaser or any of its ~~Subsidiaries~~ subsidiaries, (~~provided~~iii) make, ~~that~~or in any way participate in, ~~this clause does~~ any "solicitation" of proxies or consents (whether or not ~~restrict any Investor Affiliate from~~ relating to the election or removal of directors) within the meaning of Rule 14a-1 under the Securities Exchange Act of 1934, as amended (~~x) opposing publicly or privately any tender or exchange offer~~the "Exchange Act"), merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to ~~Issuer~~ any securities of Purchaser or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to votesubsidiaries, or seek to advise or influence any ~~Person or entity~~ person with respect to the voting ~~of,~~ of any ~~Issuer Common Stock~~ securities of Purchaser or any of its subsidiaries, or demand ~~for~~ a copy of ~~Issuer’s~~ the stock ~~ledger,~~ ledger list of ~~stockholders~~ stockholders, or any other books and records of ~~Issuer (other than with respect to matters related to the Investor’s exercise~~ Purchaser or ~~enforcement~~ any of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote againstits subsidiaries, (xiv) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a ~~13D Group or otherwise act in concert with any Person, in each case,~~ "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to ~~the Issuer Common Stock~~any voting securities of Purchaser or any of its subsidiaries, ~~or seek~~(v) otherwise act, ~~propose or otherwise act~~ alone or in concert with others, to ~~influence~~ seek to control or ~~control Issuer’s~~ influence, in any manner, the management, ~~the Issuer~~ Board of Directors or ~~policies~~policies of Purchaser or any of its subsidiaries, ~~except that this subsection does not restrict~~ (xvi) ~~the Investor Directors from participating as members~~ have any discussions or enter into any arrangements, understandings or agreements (whether written or oral) with, or advise, finance (with respect to persons for which Seller and each of ~~the Issuer Board~~ its officers, directors, majority-owned subsidiaries and affiliates for which Seller or a direct or indirect parent of Seller has voting or effective control), assist or encourage, any ~~committees thereof~~ other persons in ~~their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert~~ connection with ~~any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding~~ any of the ~~types of matters set forth in clause (i) above; (v) bring any action~~foregoing, or ~~otherwise act~~make any investment in any other person for which Seller and each of its officers, directors, majority-owned subsidiaries and affiliates for which Seller or a direct or indirect parent of Seller has voting or effective control that engages, or offers or proposes to ~~contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to~~ engage, in any of the foregoing (~~except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~it being understood that, without limiting the ~~provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration~~ generality of the ~~Restricted Period. For the avoidance of doubt~~foregoing, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) Seller shall not ~~apply (and the Investor will~~ be permitted to ~~take the actions otherwise prohibited thereunder~~act as a joint bidder or co-bidder with any other person with respect to Purchaser or any of its subsidiaries), or (vii) if make any publicly disclosed proposal regarding any of the ~~following occurs (provided~~foregoing. Seller agrees during such period not to make any proposal or statement, ~~that~~or disclose any intention, in plan or arrangement, whether written or oral, inconsistent with the ~~event~~ foregoing, or request the EXECUTION COPY other Party directly or indirectly, to amend, waive or terminate any ~~matter described in clauses (i) or (ii)~~ provision of this ~~Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d)~~ Agreement (~~other than the provisions of Section 1.1(d)(i~~including this sentence)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Repurchase Agreement (Semco Energy Inc)

Standstill. ~~(a) From~~ Mutual hereby covenants and ~~after~~ agrees that, on or before the fifth anniversary of the date hereof, ~~the Investor~~ it will not, and will cause ~~each Investor Affiliate not to~~Mutual Affiliates to not, ~~directly~~ without the prior written consent of a majority of the members of the Company's Board of Directors, do any of the following except pursuant to Section 2 hereof: (a) acquire, offer or ~~indirectly,~~ agree to acquire ~~Beneficial Ownership of~~ any shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (ior options or warrants to acquire, or securities convertible into or exchangeable for, shares of Common Stock) ~~pursuant to the Purchase Agreement (unless~~if, ~~for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ as a result of such acquisition, Mutual (together with any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the IssuerMutual Affiliates) as would Beneficially Own more than a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of ~~Issuer~~ Common Stock ~~tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than~~ in excess of a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five forty percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (3540%) of the outstanding shares of ~~Issuer~~ Common Stock ~~or thirty-five~~ plus forty percent (3540%) of the ~~voting power~~ shares of Common Stock issuable upon conversion of the ~~Issuer, and either~~ Convertible Notes plus forty percent (140%) ~~the Issuer Board recommends that the stockholders~~ of the ~~Issuer tender their~~ number of shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of Common Stock issuable upon conversation of the ~~Issuer tender~~ Preferred Stock; provided, however, that, for purposes of computing such amount, the 37,900 shares of Common Stock Beneficially Owned by Invista Capital Management, Inc. ("Invista") on December __, 1997 shall be excluded from such calculation for as long as such shares are regarded as Beneficially Owned by Invista (and no longer) and provided that no executive officer or director of Mutual or Principal or any employee of Mutual, Principal, or any of their affiliates other than officers, directors or employees of Invista charged with the responsibility thereof shall participate in the voting of such shares and provided further that for so long as the Convertible Notes are outstanding, Mutual and the Mutual Affiliates, in ~~response to such offer~~the aggregate, will not vote or act on written consent in any matter coming before shareholders at any shareholder meeting or shareholder action in excess of forty percent (40%) of the shares of Common Stock outstanding plus forty percent (40%) of the shares of Preferred Stock outstanding; (iib) directly or indirectly commence or participate in a solicitation of proxies either to oppose the ~~Issuer solicits~~ election of any Person to the Board of Directors or to seek the removal of any Person from ~~one or more Persons~~the Board of Directors, ~~or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or~~ which Person has been nominated by the ~~Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval~~ Nominating Committee of the ~~Issuer Board~~Board of Directors; (~~iii~~c) ~~subject~~ vote its shares of Common Stock for the election of any Person to the ~~obligations~~ Board of Directors other than the Persons nominated by the Nominating Committee of the ~~Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer~~ Board ~~as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate~~ of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be enteredDirectors; or (~~vii~~d) directly or indirectly make or solicit or assist any third party to make a tender or exchange offer to purchase any shares of Common Stock or make any public announcement concerning, or submit any written proposal to the ~~Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation~~Board of Directors of the Company for a merger, ~~reorganization or other relief under any federal~~share exchange, ~~state or foreign bankruptcy, insolvency, receivership~~ acquisition of substantially all of the assets or similar ~~Law now or hereafter in effect, (B) consent to~~ transaction involving the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsCompany. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Shareholders' Agreement (Principal Mutual Life Insurance Co)

Standstill. From the Execution Date of this Agreement and until the Closing Date, the Vendor warrants that: (a) ~~From~~ the Company shall not take any action which will prevent it from affirming that the representations and ~~after the date hereof, the Investor will not,~~ warranties contained in this Agreement are true and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation correct as of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor DirectorsClosing Date. (b) ~~Notwithstanding~~ the ~~provisions of Section 1.1(a)~~Company shall carry on the Business only in the ordinary course and use its best efforts to preserve intact its Business organization and goodwill and maintain its relationship with suppliers, at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan customers and other ~~customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent~~ Persons having Business relations with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offerit. (c) In no change shall be made or promised in the ~~event the Investor Affiliates make a Permitted Offer~~compensation, ~~the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required~~ commissions or bonuses payable by the ~~Exchange Act~~ Company to ~~be included in the applicable offering document~~ any of its Employees and/or consultants except for ~~such Permitted Offer~~routine previously scheduled periodic salary increases. (d) ~~Except as provided~~ the Company shall not declare or make any payment of any dividend or other distribution in ~~or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer,~~ respect of the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectlyShares other than: (i) ~~enter into~~ the dividend or ~~agree, effect or seek, offer or propose (whether publicly or otherwise)~~ distribution referred to ~~effect, or announce any intention to effect or cause or participate~~ in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together)Section 2.2 herein; (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries;and (ii) ~~except as provided in Article 3, make or participate in, directly or indirectly,~~ any ~~“solicitation”~~ dividend of ~~“proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect~~ an amount equal to the ~~voting of, any Issuer Common Stock or any demand for a copy~~ aggregate amount of ~~Issuer’s stock ledger, list~~ the cash on hand of ~~stockholders or any other books and records of Issuer (other than with respect~~ the Company plus the amount required to ~~matters related~~ compensate advances made to the ~~Investor’s exercise or enforcement~~ Vendor by the Company, less the amount of ~~rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board~~ cash needed to cover short term liabilities and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesoutstanding cheques; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) ~~Unless earlier terminated or made inapplicable pursuant to Section 1.1(f),~~ the ~~provisions of Section 1.1(d) (other than~~ Vendor shall promptly notify the ~~provisions of Section 1.1(d)(i)) will terminate upon the expiration~~ Purchaser in writing of the ~~Restricted Period. For~~ existence or happening of any event or occurrence known to the ~~avoidance~~ Vendor which may alter the accuracy or completeness of ~~doubt,~~ any ~~tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of~~ representation or warranty contained herein without relieving the ~~period referred to in the previous sentence.~~Vendor therefrom; (f) ~~The restrictions set forth~~ the Company shall maintain all of its property and Assets in ~~Section 1.1(d~~customary and satisfactory repair, order and condition; (g) ~~(other than~~ the ~~provisions of Section 1.1(d)(i))~~ Company shall not ~~apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if~~ dispose of any of its Assets outside the ~~following occurs (provided~~Normal Course of Business, ~~that, in~~ except for the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months disposition of the ~~date on which~~ Building in favour of the ~~Investor was released from such restrictions~~Vendor; (h) the Company shall not purchase, ~~then so long as such transaction is not being actively pursued at such time,~~ acquire or lease any additional assets without the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)):prior written consent of the Purchaser; and (i) in neither the ~~event that a tender offer~~ Company nor its shareholders, directors or ~~exchange offer for at least thirty-five percent (35%)~~ officers will discuss or negotiate with any other Person, or entertain or consider any other inquiries or proposals, relating to the possible disposition of the ~~Issuer Common Stock is commenced (within~~ Assets or the ~~meaning of Section 14(d)~~ Business of the ~~Exchange Act) by a third Person which~~Company, ~~for~~ unless the ~~avoidance of doubt,~~ transaction contemplated herein is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated completed by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsClosing Date. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Share Purchase Agreement (Ballantyne of Omaha Inc)

Standstill. ~~(a) From and after~~ For a period commencing upon the date hereof and ending on the later of (i) the date Lifflander (or any replacement of Lifflander appointed pursuant to Section 1(d) hereof) shall cease to be a director of the Company and (ii) September 15, 2008, no member of the ~~Investor will not~~MMI Group nor any of its Affiliates, ~~and will cause each Investor Affiliate not to~~without the prior written consent of the Board, will, directly or indirectly, ~~acquire Beneficial Ownership~~ do any of ~~shares of Issuer Common Stock, including for purposes of~~ the following provided that this Section ~~1.1(a)~~2 shall not limit any member of the MMI Group from non-public communications with the Board and further shall not apply to actions taken by an MMI Nominee in his capacity as a director while serving as a member of the Board: (a) acquire, ~~rights, options~~ offer or ~~other derivative securities or contracts or instruments~~ agree to acquire ~~such ownership that derive their value~~ (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition except by ~~the Investor Affiliates~~ way of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or ~~recapitalizations or similar~~ offerings made ~~generally~~ available ~~by the Issuer or any Subsidiary thereof~~ to holders of ~~Issuer Common Stock (or other equity~~ voting securities of the ~~Issuer~~Company generally on a pro rata basis), ~~including rights offerings and distributions made generally to holders~~ directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of ~~Issuer Common Stock (~~control of another person or entity, by joining a partnership, limited partnership, syndicate or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences "group" (within the meaning of Section ~~14(d~~13(d)(3) of the Exchange Act~~) a tender~~ ), through swap or ~~exchange offer which~~hedging transactions or otherwise, any voting securities of the Company or any voting rights decoupled from the underlying voting securities, if ~~consummated~~such acquisition, offer to acquire or agreement to acquire would result in ~~such Person becoming the Beneficial Owner of Issuer Common Stock~~ MMI (together with any other person or entity, partnership, limited partnership, syndicate or other ~~equity securities~~group) owning, controlling or otherwise having ~~Majority Voting Power~~ any ownership or economic interest in more than twenty percent (~~such offer, a “Third Party Offer”), unless during such ten (10~~20%) ~~day period,~~ of the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase outstanding shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (~~iii~~b) ~~will expire no earlier than midnight~~sell, ~~New York City time~~offer or agree to sell, on directly or indirectly, through swap or hedging transactions or otherwise, whether by purchase, tender or exchange offer, through the ~~twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation~~ acquisition of control of another person or entity, by joining a partnership, limited partnership, syndicate or other group, any voting securities of the ~~Investor~~ Company or any voting rights decoupled from the underlying voting securities held by MMI or its Affiliates or Associates to ~~purchase Issuer Common Stock; provided~~any third party, ~~that~~if such sale, offer to sell or agreement to sell would result in such third party, together with its Affiliates and Associates, having an ownership or economic interest in more than ten percent (A10%) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of ~~Issuer~~ Common Stock; provided that nothing in this Section 2(b) shall restrict any member of the MMI Group from engaging in open market transactions, transactions with broker dealers in the ordinary course of their business or transactions with entities that are permitted to and do file Statements on Schedule 13G with respect to the Common Stock ~~outstanding at~~ so long as such member of the ~~time~~ MMI Group does not have any knowledge of ~~commencement that are not Beneficially Owned~~ any plan or intention on the part of the buyer to control or seek to control, or otherwise actively influence the Board or management of, the Company; (i) engage, or in any way participate, directly or indirectly, in any "solicitation" (as such term is defined in Rule 14a-1(l) promulgated by the ~~Investor Affiliates as~~ SEC under Exchange Act ) of ~~the date such Permitted Offer is commenced~~proxies or consents, ~~disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock~~ (ii) seek to advise, encourage or influence any ~~such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions~~ person or entity with respect to the ~~consummation~~ voting of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other any voting securities of the ~~Investor~~ Company, (iii) initiate, propose or otherwise "solicit" (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) stockholders of the Company for the approval of stockholder proposals or other business to be considered at a ~~Subsidiary thereof~~stockholders meeting, or (iv) induce or attempt to induce any other person or entity to initiate any such stockholder proposal; provided that nothing in this Section 2(c) shall limit the ability of the MMI Group to communicate to any third party, including through the issuance of a ~~combination thereof; provided~~public statement, ~~that, such consideration offered has, on a per share~~ how it intends to vote the shares of ~~Issuer~~ Common Stock ~~basis, a fair market value (as determined in good faith~~ beneficially owned by it on any matter put to the ~~Investor’s board of directors) equal to or greater than the closing price~~ stockholders of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document Company for ~~such Permitted Offer.~~their approval; (d) ~~Except~~ form, join or in any way participate in a partnership, syndicate, or other group, including without limitation any "group" as ~~provided~~ defined under Section 13(d)(3) of the Exchange Act, with respect to any voting securities of the Company, other than the MMI Group or a group that includes only some or all of the persons or entities identified as "Reporting Persons" (or Affiliates thereof) in MMI's statement on Schedule 13D/A filed with the SEC on February 20, 2008; (e) deposit any Company voting securities in any voting trust or ~~permitted by Sections 1.1(b)~~subject any Company voting securities to any arrangement or agreement with respect to the voting thereof, except as expressly set forth in this Agreement; (f) seek, alone or in concert with others, (e)1) to call a meeting of stockholders or solicit consents from stockholders or conduct a nonbinding referendum of stockholders, (f)2) to obtain representation on the Board except as expressly permitted in this Agreement, (3) to effect the removal of any member of the Board, (4) to make a stockholder proposal at any meeting of the stockholders of the Company, (5) to make a request for a list of the Company's stockholders, or (6) to amend any provision of the Company's certificate of incorporation or bylaws; (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or ~~seek~~seek to effect (including, without limitation, by entering into any negotiations, agreements or understandings whether or not legally enforceable with any person), offer or propose ~~(whether publicly or otherwise)~~ to effect, ~~or announce any intention to effect or~~ cause or participate in in, or in any way ~~assist,~~ assist or facilitate ~~or encourage~~ any other ~~Person~~ person to effect or seek, offer or propose ~~(whether publicly or otherwise)~~ to effect or participate in: , (Ai) ~~except to the extent otherwise specifically permitted by this Agreement,~~ any acquisition of more than fifteen percent (15%) of any ~~Issuer Common Stock (or Beneficial Ownership thereof)~~ securities, or any material ~~portion~~ assets or businesses, of the ~~assets~~ Company or any of ~~Issuer and~~ its ~~Subsidiaries~~ subsidiaries, (~~taken together); (B~~ii) any tender offer or exchange offer, ~~merger~~ merger, acquisition, share exchange or other business combination involving ~~Issuer~~ more than fifteen percent (15%) of any of the voting securities or any of the material businesses or assets of the Company or any of its ~~Subsidiaries (provided~~subsidiaries, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to ~~Issuer~~ the Company or any of its ~~Subsidiaries;~~subsidiaries or any material portion of its or their businesses (each a "Transaction"); provided that nothing in this Section 2(g) shall restrict any member of the MMI Group from engaging in discussions regarding any proposed Transaction so long as the MMI Group notifies the Company of any bona fide proposals relating to a potential Transaction. (iih) ~~except as provided in Article 3~~otherwise act, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to control or seek to control or influence or ~~control Issuer’s~~ seek to influence the management, the ~~Issuer~~ Board or ~~policies~~policies of the Company, except ~~that~~ as otherwise expressly permitted by this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B)Agreement; (ivi) ~~take~~ unless required by law, make or issue, or cause to be made or issued, any ~~action which would~~ public disclosure, announcement or ~~would reasonably be expected~~ statement (including without limitation the filing of any document or report with the SEC or any other governmental agency or any disclosure to ~~force Issuer to make a public announcement regarding~~ any journalist, member of the ~~types of matters set forth in clause~~ media or securities analyst) (i) ~~above;~~ in support of any matter described in the foregoing paragraphs of this Section 2, (vii) ~~bring any action~~negatively commenting upon the Company, including the Company's business, management or board of directors, or (iii) inconsistent with, or otherwise ~~act~~contrary to, ~~to contest~~ the ~~validity~~ provisions of this ~~Section 1.1(d)~~Agreement or the statements in the joint press release issued pursuant to this Agreement; or (vij) enter into any ~~discussions~~ negotiations, agreements or ~~arrangements~~ understandings with any third party with respect to the foregoing, or advise, assist, encourage or seek to persuade any third party to take any action with respect to any of the ~~foregoing (except as~~ foregoing, or otherwise ~~expressly provided herein). (e) Unless earlier terminated~~ take or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, cause any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if action inconsistent with any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsforegoing. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Governance and Cooperation Agreement (Unisys Corp)

Standstill. Without the prior approval of the Company, from the Closing Date until the twenty-four (a24) ~~From and after~~ month anniversary of the ~~date hereof~~Closing Date, the Investor agrees that it will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor its Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not~~, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner~~, directly or indirectly: (ia) ~~enter into or agree, effect or seek~~purchase, offer ~~or propose (whether publicly or otherwise)~~ to ~~effect~~purchase, or ~~announce any intention~~ agree to ~~effect~~ purchase or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” acquire beneficial ownership (as ~~such terms are defined under Regulation 14A~~ determined in accordance with Rule 13d-3 and Rule 13d-5 under the Exchange Act) ~~to vote~~of any Common Stock, or ~~seek to advise~~ any securities convertible or ~~influence~~ exchangeable into Common Stock, excluding any ~~Person or entity with respect~~ shares of Common Stock acquired pursuant to the ~~voting of~~Transaction Agreements; (b) make, or participate in, any ~~Issuer Common Stock~~ solicitation of proxies to vote any voting securities of the Company or any ~~demand~~ of its subsidiaries, or propose to change or control the management or board of directors of the Company by use of any public communication to holders of securities intended for ~~a copy of Issuer’s stock ledger~~such purpose; provided, ~~list of stockholders or any other books and records of Issuer (other than with respect to matters related to~~ however, that nothing in this Section 10.2 shall limit the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others ability to vote ~~against~~or transfer (subject to Section 10.1) its Common Stock; (c) make a public proposal for a change of control transaction, ~~(x) any proposal of~~ including a ~~third party regarding a merger~~ merger, consolidation or other business combination ~~involving~~ transaction or tender offer related thereto, of the ~~Issuer~~ Company or any ~~Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ of the ~~Issuer~~Company’s ~~stockholders is required under Delaware Law~~ subsidiaries, or ~~Nasdaq rules~~the purchase of all or substantially all of the securities of the Company or the assets of the Company and its subsidiaries; (~~iii~~d) ~~call~~ knowingly encourage, accept, or ~~seek to call~~ support a ~~meeting~~ tender, exchange, or offer proposal by any Person other than the Investor, the consummation of ~~Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate~~ which would result in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members Change of Control of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)Company; or (vie) ~~enter into any discussions or arrangements with any third party with respect to any of~~ Notwithstanding the foregoing ~~(except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to~~ restrictions, this Section ~~1.1(f), the provisions~~ 10.2 shall terminate and be of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (no further force and ~~the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that,~~ effect in the event ~~any matter described in clauses~~ of (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer ~~for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act)~~ by a ~~third~~ Person ~~which~~other than the Investor that has not been rejected by the Company’s Board of Directors, ~~for the avoidance of doubt, is not an Investor Affiliate (~~and ~~not involving any breach of Section 1.1(d)) which tender offer or exchange offer,~~ if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to constitute a Change of Control ~~Transaction~~of the Company, (ii) an issuer tender offer by the Company, or ~~the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board;~~ (iii) ~~subject~~ the Company publicly announces a definitive agreement to consummate an Acquisition Transaction; provided, this Section 10.2 shall be reinstated and apply in full force according to their terms if any event set forth in this Section 10.2, which resulted in the ~~obligations~~ termination of this Section 10.2 is not completed or if such announced transaction is abandoned and no similar transaction has been announced and not abandoned. Upon reinstatement of the ~~Investor under~~ provisions of Section ~~3.2~~10.2, the provisions of this Section 10.2 shall continue to govern in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the ~~foregoing~~ events described in this Section 10.2 shall ~~be entered; or (vii)~~ occur. Notwithstanding any other provision of this Section 10.2, the ~~Issuer or any material Subsidiary~~ Investor shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent have the right to make a non-public proposal directly to the ~~institution of,~~ Chief Executive Officer of the Company for an Acquisition Transaction or ~~fail to contest in~~ a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) tender offer involving a Change of Control ~~Transaction or (y) a sale of a material portion~~ of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the InvestorCompany.

Appears in 1 contract

Samples: Share Purchase Agreement (Scholar Rock Holding Corp)

Standstill. 3.1 Commencing on the date of this Agreement and until the date that is twelve (a12) ~~From and~~ months after the date ~~hereof, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes~~ of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (~~unless, for~~ the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “~~Third Party Offer~~Standstill Period”), ~~unless during such ten (10) day period~~each Stockholder agrees, ~~the Issuer Board takes such actions as are reasonably necessary to prevent~~on behalf of itself and its Affiliates and Associates, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror that for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such ~~tender or exchange offer~~ Stockholder Beneficially Owns any Voting Securities, except pursuant to a negotiated transaction with such Stockholder approved by the board of directors of the Company (~~such tender or exchange offer meeting~~ the ~~requirements set forth in this Section 1.1(b~~“Board”), ~~a “Permitted Offer”):~~ each Stockholder will not (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause ~~each Investor Affiliate~~ its Affiliates and ~~its and their respective Representatives acting on behalf of Investor or any Investor Affiliate~~ Associates not to), in any manner, directly or indirectly: (ia) ~~enter into or agree~~make, ~~effect or seek, offer or propose (whether publicly or otherwise) to~~ effect, ~~or announce any intention to effect or~~ initiate, cause or participate in ~~or in~~ any ~~way assist~~acquisition (by purchase, ~~facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly~~ gift or otherwise) ~~to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition~~ of Beneficial Ownership of any ~~Issuer Common Stock~~ securities of the Company or any securities of any Subsidiary or other Affiliate or Associate of the Company if such acquisition would result in (~~or Beneficial Ownership thereof~~i) such Stockholder (and its permitted transferees) and its and their respective Affiliates and Associates collectively Beneficially Owning ten percent (10%) or ~~any material portion~~ more of the ~~assets of Issuer and its Subsidiaries (taken together); (B) any tender~~ then-outstanding Voting Securities or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) ~~except as provided~~ any Group in ~~Article 3, make~~ which such Stockholder (and its permitted transferees) participates collectively Beneficially Owning twenty percent (20%) or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members more of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules;then-outstanding Voting Securities; or (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (ivb) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest challenging the validity or enforceability of this Section ~~1.1(d); or (vi~~3.1(a) ~~enter into any discussions~~ of this Agreement unless the Company is challenging the validity or ~~arrangements with any third party with respect to any~~ enforceability of ~~the foregoing (except as otherwise expressly provided herein)~~this Agreement. ~~(e) Unless earlier terminated or made inapplicable pursuant~~ 3.2 Subject to Section ~~1.1(f~~3.2(b), the provisions of Section ~~1.1(d~~3.1 shall terminate and be of no further force and effect in the event the Board shall have endorsed, approved, recommended, or resolved to endorse, approve or recommend a Company Acquisition Transaction. (a) ~~(other than~~ All of the provisions of Section ~~1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant~~ 3.1 shall be reinstated and shall apply in full force according to ~~Section 1.1(f) will not result in any extension of the period referred to~~ their terms in the ~~previous sentence.~~ event that: (fi) ~~The restrictions set forth in Section 1.1(d) (other than~~ if the provisions of Section ~~1.1(d)(i)~~3.1 shall have terminated as the result of a Company Acquisition Transaction endorsed, approved, recommended by the Board involving a tender offer, and such tender offer (as originally made or as amended or modified) shall ~~not apply~~ have terminated (~~and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided~~without closing), ~~that, in the event any matter described in clauses (i)~~ or (ii) ~~of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than~~ if the provisions of Section ~~1.1(d)(i~~3.1 shall have terminated as a result of a Company Acquisition Transaction endorsed, approved, recommended by the Board, and the Board shall have determined not to proceed with such Company Acquisition Transaction (and such Company Acquisition Transaction shall not have closed). (b) ~~ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months~~ Upon reinstatement of the ~~date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time~~provisions of Section 3.1, the ~~restrictions set forth in~~ provisions of this Section ~~1.1(d)~~ 3.2 shall ~~thereafter resume and~~ continue to ~~apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i)~~ govern for the remainder of the Standstill Period in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the ~~foregoing~~ events described in Section 3.2(a) shall ~~be entered; or (vii)~~ occur. Upon the ~~Issuer~~ closing of any acquisition of any securities of the Company or rights or options to acquire any such securities by such Stockholder or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its ~~assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding,~~ Affiliates or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding Associates that would have been prohibited by the provisions of Section ~~1.1(d)~~3.1 but for the provisions of this Section 3.2, all provisions of Section 3.1 and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor3.2 shall terminate.

Appears in 1 contract

Samples: Share Lock Up and Standstill Agreement (Abacus Life, Inc.)

Standstill. ~~(a) From~~ The Company will not, from and after the date ~~hereof,~~ hereof and until the ~~Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership~~ thirtieth (30) day following the later of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) the date on which the Holder may sell all of the Exchange Shares without restriction or limitation pursuant to Rule 144 and (ii) the ~~Purchase Agreement (unless,~~ date the Company files its Quarterly Report on Form 10-Q for the ~~avoidance of doubt~~quarterly period ended June 30, 2014 (such later date, the ~~representation of the Investor in Section 4.2(d) hereof is not true and correct~~"Threshold Date"), (iix) ~~as a result~~ consummate any sale, pledge, contract to sell or other disposition of any ~~stock splits~~equity securities or securities convertible, ~~stock dividends~~ exercisable or ~~other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other~~ exchangeable into equity securities of the ~~Issuer~~Company (collectively, “Equity Securities”), ~~including rights offerings~~ other than Equity Securities (that are at the time of issuance and ~~distributions made generally~~ until the Threshold Date, shall be "restricted securities" (as defined under Rule 144)) issued or issuable: (A) to ~~holders of Issuer Common Stock (~~directors, officers, employees or ~~other equity securities~~ bona fide consultants performing services typically performed by employees of the ~~Issuer)~~ Company in their capacity as ~~a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including~~ such pursuant to ~~a shareholder rights plan~~ the Company’s existing or any future stock option, stock incentive or similar plan ~~or agreement~~(as the same may be amended from time to time) approved by the Company’s Board of Directors and majority stockholders, (~~iii~~B) ~~as a result~~ upon the conversion or exercise of Equity Securities (other than securities that are covered by clause (A) above) issued prior to the ~~exercise~~ date hereof; and (~~or exchange~~C) ~~of any rights distributed by the Issuer~~ pursuant to ~~clause (ii) above, (iv) in accordance with a Permitted Offer~~ acquisitions or ~~(v) which has been~~ strategic transactions approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) disinterested directors of the ~~Exchange Act)~~ Company, provided that any such issuance shall only be to a ~~tender or exchange offer which, if consummated, would result in such~~ Person ~~becoming the Beneficial Owner of Issuer Common Stock~~ (or ~~other~~ to the equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation holders of a ~~shareholder rights plan~~ Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and ~~other customary defensive actions~~shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities for the purpose of raising capital or to an entity whose primary business is investing in securities, (y) enter into any equity line of credit, "at-the-market" offering (as defined in Rule 415(a)(4) under the ~~date Issuer publicly recommends a Third Party Offer~~ 0000 Xxx) or ~~takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan~~ substantially similar transaction, or ~~granting approval of such offeror for purposes of DGCL Section 203), and~~ (z) at allow any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi) enter into any discussions or arrangements with any third party registration statement with respect to any of the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant~~ Company's securities to ~~Section 1.1(f),~~ be declared effective by the ~~provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period~~SEC. For the avoidance of doubt, ~~any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of~~ the ~~period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i))~~ Company shall not ~~apply (and the Investor will~~ be ~~permitted to take the actions otherwise~~ prohibited ~~thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses~~ from: (i) ~~or (ii) of this Section 1.1(f) has occurred and resulted in~~ closing the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated exchanges contemplated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) mergerOther Agreements, (ii) ~~consolidation~~engaging in discussions, negotiations and document preparation with potential investors and agents regarding financing plans and related transactions for the Company and (iii) ~~Change~~ filing a registration statement with the SEC to register a primary offering of ~~Control Transaction~~securities of the Company, as long as any such registration statement is not declared effective with the SEC on or ~~(iv) other business combination transaction unless, in each case, at least ten (10) days~~ prior to the ~~execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement~~Threshold Date. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Amendment and Exchange Agreement (LabStyle Innovations Corp.)

Standstill. ~~(a) From and after~~ During the period beginning on the date ~~hereof~~hereof and ending on the earliest to occur of (A) the tenth anniversary of the Effective Date, (B) the date on which the Stockholders own, collectively, Voting Securities which would represent less than 10% of the voting power in the general election of directors of the Company, on a fully diluted basis, of all Voting Securities then outstanding or (C) a Termination Event under any subdivision of Section 5.2 (such period, the ~~Investor~~ "Standstill Period"), each Stockholder will not, and will cause each ~~Investor Affiliate~~ of its Affiliates not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) ~~enter into~~ except with the prior approval of two-thirds of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or ~~agree, effect or seek~~to any third parties) acquire, offer ~~or propose~~ to acquire (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by ~~this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any~~ tender or exchange ~~offer~~offer or otherwise), ~~merger~~ or ~~other business combination involving Issuer~~ agree to acquire, by purchase or otherwise, beneficial ownership of any Voting Securities or voting rights or direct or indirect rights or options to acquire any Voting Securities of the Company or any of its ~~Subsidiaries~~ Affiliates other than (~~provided~~A) the exercise of convertible securities acquired in compliance with the terms of this Agreement, ~~that~~or an acquisition as a result of a stock split, ~~this clause does not restrict any Investor Affiliate from~~ stock dividend or similar recapitalization, (xB) ~~opposing publicly or privately any tender or exchange offer, merger or other business combination involving~~ the ~~Issuer or any Subsidiary thereof or (y) Transferring any~~ acquisition of shares of ~~Issuer~~ Common Stock pursuant to ~~such tender~~ the Merger Agreement or ~~exchange offer~~the GranCare Merger Agreement, ~~merger or other business combination); or~~ (C) acquisitions of Voting Securities provided that the aggregate number of Voting Securities beneficially owned by all Stockholders and their Affiliates (including the Shares) after giving effect to such acquisitions does not exceed 49% of the Total Shares Outstanding; (D) stock options or similar rights granted by the Company to an Affiliate of such Stockholder as compensation for performance as a director or officer of the Company or its subsidiaries (and any ~~recapitalization~~shares issuable upon exercise thereof), ~~restructuring~~(E) transfers among Stockholders or (F) any rights which are granted to all stockholders of the Company (and any share issuable upon exercise thereof); provided, ~~liquidation~~however, ~~dissolution~~ that if the Stockholders or ~~other extraordinary transaction~~ any of their Affiliates in good faith inadvertently acquire not more than 100,000 shares of Common Stock in violation of these provisions and within 15 days after the first date on which the Stockholders have actual knowledge (including by way of written notice given by the Company) that a violation has occurred, the Stockholders or any of their Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that the Stockholders and their Affiliates no longer beneficially own any such shares or have any agreement or understanding relating to such shares, this Section 5.1 shall be deemed not to have been violated; and provided further, that no violation of this provision shall be deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (aa) investments in investment funds as to which no Stockholder or Affiliate thereof has control or power to control with respect to ~~Issuer~~ voting or investment decisions or (bb) acquisitions of securities by a limited partner in any of Stockholder or Affiliates thereof as to which limited partner no Stockholder or its ~~Subsidiaries~~Affiliates has control or power to control; (ii) except ~~as provided in Article 3, make~~ pursuant to this Agreement or ~~participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under~~ the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Proxy Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a ~~13D~~ Group with respect to any securities of the Company or its Affiliates, other than with other Stockholders or Affiliates or Associates of any Stockholder or Ares Leveraged Investment Fund, L.P., provided, however, that in the case of securities other than Voting Securities, Stockholders may participate in a Group with respect thereto with the prior approval of two-thirds of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third party); (iii) grant a proxy to any Person other than (I) an Affiliate or Associate of a Stockholder; provided that any such Person shall not, pursuant to the grant of such proxy or otherwise, have the right or ability to vote shares of Common Stock representing 50% or more of the Total Shares Outstanding, (II) the proxy granted to Apollo pursuant to the Proxy Agreement or (III) proxies designated by the Board of Directors of the Company in connection with any contested election, or otherwise ~~act~~ make, or in ~~concert~~ any way cause or participate in, any "solicitation" of "proxies" to vote (as those terms are defined in Regulation 14A under the Exchange Act) with respect to the Company or its Affiliates, or communicate with, seek to advise, encourage or influence any Person, in ~~each case~~any manner, with respect to the ~~Issuer Common Stock~~voting of, securities of the Company or its Affiliates, or ~~seek, propose~~ become a "participant" in any "election contest" (as those terms are defined or ~~otherwise act alone~~ used in Rule 14a-11 under the Exchange Act) with respect to the Company or its Affiliates (other than (A) nonpublic communications with other Stockholders or Affiliates or Associates of any Stockholder which would not require public disclosure by any Person or (B) with the prior approval of a two thirds majority of the entire Board of Directors (which approval is requested in ~~concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection~~ a manner which does not ~~restrict (x) the Investor Directors from participating as members of the Issuer Board and~~ require disclosure publicly or to any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(Bthird party)); (iv) ~~take~~ initiate, propose or, except with the prior approval of two- thirds of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any ~~action~~ third parties) otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company or its Affiliates or induce or attempt to induce any other Person to initiate any stockholder proposal or seek election to or seek to place a representative on the Board of Directors of the Company (except pursuant to Section 4.1 of this Agreement) or its Affiliates or seek the removal of any member of the Board of Directors of the Company or its Affiliates (for this purpose, the actions of the Stockholder Designees in communicating (without public disclosure or disclosure to third parties) with the Board of Directors in their capacity as directors of the Company, and non-public communication by a Stockholder with other Stockholders or Affiliates of any Stockholder which would ~~or would reasonably~~ not require public disclosure by any Person, shall not be ~~expected~~ deemed to ~~force Issuer to make a public announcement regarding any of the types of matters set forth~~ be in ~~clause (i) above; (v) bring any action, or otherwise act, to contest the validity~~ contravention of this ~~Section 1.1(d~~paragraph (iv)); or (viv) ~~enter into~~ make any ~~discussions or arrangements with any third party~~ public announcement with respect to to, or submit any proposal for, any transaction involving the Company, on the one hand, and Apollo or any Affiliates of Apollo, on the ~~foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~other hand, which would be deemed a "business combination" under the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%203(c)(3)(i)-(iv) of the ~~Issuer Common Stock~~ DGCL, whether or not such proposal might require public disclosure by the Company, unless such proposal is ~~commenced (within~~ directed and disclosed solely to the ~~meaning~~ Board. provided, that this Section 5.1 shall not restrict or inhibit the rights of ~~Section 14(d)~~ a Stockholder to exercise its voting rights as a stockholder of the ~~Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate~~ Company (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to ~~the obligations of the Investor under~~ Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%4.2); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Stockholders Agreement (Mariner Post Acute Network Inc)

Standstill. ~~(a) From and after the date hereof~~6.1.1 The standstill obligation, the Investor will not, and will cause each Investor Affiliate not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set ~~forth~~ out in this ~~Section 1.1(b)~~Article 6.1, a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates take effect as of the ~~date such Permitted Offer is commenced, disregarding for purposes~~ Date of ~~calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”)~~ this Agreement and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, will terminate on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the ~~public announcement of such Permitted Offer~~ date that is ten (10) years following the date on which the Closing occurs and (y) ~~commencement~~ the termination of ~~such Permitted Offer~~this Agreement if the Closing does not occur (the “Standstill Period”). ~~(c) In~~ 6.1.2 During the ~~event the Investor Affiliates make a Permitted Offer~~Standstill Period, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by IssuerInvestor, the ~~Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of~~ Parent Investor or any ~~Investor Affiliate not to~~of their Affiliates, ~~in any manner, directly or indirectly~~shall not: (i) ~~enter~~ without the express written consent of the Issuer, directly or indirectly acquire any additional Equity Securities (other than the Warrants) of the Issuer, if after giving effect to such acquisition the Investor, the Parent Investor, any of the Affiliates of the Investor or the Parent Investor, or any other party Acting in Concert with the Investor, the Parent Investor or any of the Affiliates of the Investor or the Parent Investor would (without taking into account the Warrants or the shares issuable (but not yet issued) thereunder owned by them at that time) together in the aggregate directly or indirectly own or have the right to acquire more than 29.9% of the then issued and outstanding voting securities of the Issuer (assuming the exercise, conversion or exchange of any Equity Securities held by any of them at any time (other than the Warrants) that are exercisable, convertible or exchangeable into or ~~agree~~for shares of the Issuer at such time) (the resulting number of securities rounded down) (the “Standstill Limit”); (ii) directly or indirectly encourage or support a tender, ~~effect~~ exchange or ~~seek,~~ other offer or proposal by a third party; (iii) propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (Ba) any merger, consolidation, business combination, tender or exchange offer, ~~merger~~ purchase of the Issuer’s assets or ~~other business combination involving Issuer~~ businesses, or ~~any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination~~ similar transaction involving the Issuer or ~~any Subsidiary thereof or~~ (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~b) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity with respect to the voting of, any Issuer Common Stock or any demand for a copy of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (~~other than with respect to matters related to~~ it being understood that the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of Chief Executive Officer may contact the Issuer’s ~~stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek~~ Chief Executive Officer on a non-public and non-committal basis to ~~call a meeting of~~ gauge the Issuer’s ~~stockholders or initiate any stockholder proposal for action by~~ Chief Executive Officer’s views on the Issuer’s ~~stockholders, form, join or~~ potential interest in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth matter described in clause (ia) ~~above;~~ or (~~v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d~~b)); or (viiv) ~~enter into any discussions~~ directly or ~~arrangements~~ indirectly (a) submit matters to, request that matters be submitted to, or request the convening of, a general meeting of the shareholders of the Issuer, or (b) solicit proxies or consents, or become a participant in a solicitation in relation to matters submitted to a general meeting of the shareholders of the Issuer, in each case of (a) and (b) without or against the recommendation or support by the Board of Directors except that Investor may solicit proxies or consents and may become a participant in a solicitation in connection with any ~~third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f)~~proposal that would adversely affect its rights under this Agreement, the ~~provisions of Section 1.1(d) (other than~~ Warrants, or the ~~provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt~~Option, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (License and ~~the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i)~~ Collaboration Agreement or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power shareholder of the Issuer, and ~~either (1) the Issuer Board recommends~~ may also make a proposal pursuant to Article 7.3.1, provided that the ~~stockholders~~ provisions of this Article 6.1.2(iv) shall automatically cease to apply when the ~~Issuer tender their shares in response~~ Investor ceases to ~~such offer or does not recommend against~~ have the ~~tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer~~ right to appoint Investor Board ~~later publicly recommends that the stockholders of the Issuer tender their shares in response~~ Designees pursuant to ~~such offer~~Article 7.3; (iia) ~~the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal~~ make public statements with respect to ~~a Change~~ (save if legally obliged to) or, (b) with the actual knowledge of ~~Control Transaction~~the Parent Investor’s executive officers, provide assistance to, commit to, or ~~the Issuer makes a public announcement that it is seeking~~ discuss or enter into any agreement or arrangement with any party to ~~sell itself and~~do, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter prohibited actions provided that in ~~effect, (B) consent~~ relation to ~~the institution of, or fail to contest~~ prohibited actions in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, subsection (ii) ~~consolidation, (iii) Change~~ that have been committed without the actual knowledge of ~~Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to~~ the ~~execution of such agreement~~Parent Investor’s executive officers, the ~~Issuer has given~~ Investor and Parent Investor shall promptly terminate and unwind such actions upon written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion request of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Subscription Agreement (Gilead Sciences Inc)

Standstill. Commencing as of the Effective Date and for so long as the Purchaser beneficially owns (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) at least 5% of the then outstanding Common Stock of the Company: (a) ~~From and after~~ Purchaser (including all Affiliates) shall not acquire or agree to acquire, publicly offer, or make any public proposal with respect to the ~~date hereof~~possible acquisition of "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of any voting securities of the Company, any securities convertible into or exchangeable for voting securities of the ~~Investor will not~~Company, ~~and will cause each Investor Affiliate not to~~or any other right to acquire voting securities of the Company, ~~directly or indirectly, acquire Beneficial Ownership~~ except by way of ~~shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options~~ stock dividends or other ~~derivative~~ distributions or offerings made available to holders of securities of the Company generally, from the Company or ~~contracts~~ any other person or ~~instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock~~entity, ~~if,~~ if after giving effect to such ~~acquisition~~acquisition of additional shares, the ~~Investor’s Investor~~ total beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Purchaser (together with all of its Affiliates) shall be greater than the Permitted Percentage ~~Interest would exceed~~ (as such term is defined in the ~~Cap~~Rights Agreement dated as of February 1, 1999 between the Company and American Stock Transfer & Trust Company, as Rights Agent, as amended) (the "Beneficial Ownership Limitation") without the prior written consent of the Company, which consent may be withheld in its sole discretion; provided, however, that ~~such restriction on acquisitions will~~ it shall not be ~~applicable with respect to~~ a violation of the ~~acquisition by~~ prohibition contained in this Section 1.1(a) if Purchaser or any of its Affiliates shall exceed the ~~Investor Affiliates of~~ Beneficial Ownership ~~of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii)~~ Limitation solely as a result of ~~any stock splits, stock dividends~~ an acquisition or ~~other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders~~ retirement of ~~Issuer Common Stock (or other equity~~ shares of securities of the ~~Issuer)~~Company by the Company which, ~~including rights offerings~~ by reducing the number of shares outstanding, increases the proportionate number of shares of securities beneficially owned by Purchaser or any of its Affiliates, provided that Purchaser and ~~distributions made generally to holders~~ its Affiliates do not thereafter acquire beneficial ownership of ~~Issuer Common Stock (or other equity~~ additional shares of securities of the ~~Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of~~ Company while still exceeding the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors.Beneficial Ownership Limitation; and (b) ~~Notwithstanding~~ neither Purchaser nor any Affiliate shall (i) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" to vote (as such terms are used in the ~~provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d)~~ proxy rules of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to Issuer or any of its Subsidiaries; (ii) except as provided in Article 3, make or participate in, directly or indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to ~~advise~~ advise, encourage or influence any ~~Person~~ person or entity with respect to the voting ofof any shares of capital stock of the Company, ~~any Issuer Common Stock~~ initiate, propose or ~~any demand~~ otherwise solicit stockholders of the Company for ~~a copy~~ the approval of ~~Issuer’s stock ledger, list of stockholders~~ one or more stockholder proposals or induce or attempt to induce any other ~~books and records~~ individual, firm, corporation, partnership or other entity to initiate any stockholder proposal; (ii) deposit any securities of ~~Issuer~~ the Company having the right to vote generally in any election of directors of the Company (~~other than~~ "Voting Stock") into a voting trust or subject any shares of Voting Stock to any arrangement or agreement with respect to ~~matters related to~~ the ~~Investor’s exercise~~ voting of such securities, where the activities of such voting trust, arrangement or ~~enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members~~ agreement would constitute a violation of the ~~Issuer Board and~~ terms of this Agreement; (iii) participate in a "13D Group" (as defined below) with respect to any ~~committees thereof in their capacity as~~ securities of the Company, where the activities of such or 13D Group would constitute a violation of the terms of this Agreement; (Biv) ~~the Investor Affiliates from opposing publicly or privately~~make any public announcement with respect to, or ~~voting against~~ submit a proposal for, or ~~encouraging others to vote against,~~ offer of (xwith or without conditions) any ~~proposal~~ business combination, merger, acquisition, restructuring, recapitalization, tender or exchange offer or other similar transaction involving the Company, or its securities or a material portion of its assets; (v) arrange, or in any way participate, directly or indirectly, in any financing of a third party ~~regarding a merger~~ for the purchase by such party of any voting securities or ~~other business combination involving~~ securities convertible or exchangeable into or exercisable for any voting securities, or assets of the ~~Issuer~~ Company, except for such securities or assets as are then being offered for sale by the Company or any ~~Subsidiary thereof or (y) other similar corporate transaction on which a vote~~ of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or would reasonably be expected to force Issuer to make a public announcement regarding any of the types of matters set forth in clause (i) above; (v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d)Affiliates; or (vi) ~~enter into~~ make any ~~discussions~~ request or proposal to amend, waive or terminate any provision of this paragraph; or (vii) initiate any discussions, negotiations, arrangements or understandings with any third party with respect to the Company in connection with any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period matters referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that, in the event any matter described in clauses (i) or through (iivi) of above; provided, however, that nothing in this Section ~~1.1(f~~1.1(b), shall prohibit the Purchaser from: (x) ~~has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing~~ exercising its rights to ~~apply~~ designate members to the ~~Investor, then, in the event the transaction related to such matter has not occurred within six (6) months~~ Company's Board of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply Directors in accordance with ~~their terms, until terminated pursuant to~~ Section ~~1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%)~~ 8.1 of the ~~Issuer Common~~ Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting Purchase Agreement; or (y) ~~if so nominated are not so elected~~ voting its shares of Common Stock of the Company in favor of, or seeking to advise, encourage or influence any person or entity solely with respect to the ~~Issuer Board~~voting of any shares of capital stock of the Company in favor of, the election of the members designated in accordance with Section 8.1 of the Stock Purchase Agreement or the ~~Issuer otherwise breaches its obligations under Article 3; (iv)~~ matters recommended by the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect Board of Directors of the ~~Issuer~~ Company in the proxy statement referenced in Section 8.3 of the Stock Purchase Agreement. Each party agrees to promptly advise the other party of any inquiry or ~~any material Subsidiary~~ proposal made by or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering to it with respect to any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditorsforegoing. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investor.

Appears in 1 contract

Samples: Standstill Agreement (Warburg Pincus Private Equity Viii L P)

Standstill. During the Lock-Up Term (and, if relevant, during any Extension Period), the Investor agrees that neither it nor any of its Affiliates or Permitted Transferees (collectively, the “Standstill Parties”) shall (and the Investor shall cause its Affiliates not to), except upon any written request for consent from the Investor which is expressly approved, or unless invited in writing by, the Board of Directors of the Company (and the seeking of any such consent shall not of itself amount to a breach hereof) and except as is otherwise contemplated by the terms of this Agreement: (a) ~~From and after the date hereof, the Investor will not, and will cause each Investor Affiliate not to,~~ directly or indirectly, acquire ~~Beneficial Ownership~~ legal or beneficial ownership of ~~shares~~ Ordinary Shares, or acquire any right or interest in the legal or beneficial ownership of ~~Issuer Common Stock~~Ordinary Shares, ~~including for purposes~~ that would or could reasonably be expected to cause such Standstill Parties to become the legal or beneficial owners of ~~this Section 1.1(a)~~Ordinary Shares, ~~rights~~or make a tender, ~~options~~ exchange or other ~~derivative securities or contracts or instruments~~ offer to acquire ~~such ownership that derive their value (in whole or in part) from such Issuer Common Stock~~Ordinary Shares, ~~if,~~ if after giving effect to such acquisition, such Standstill Parties would beneficially own more than the ~~Investor’s Investor Percentage Interest would exceed the Cap~~Standstill Limit; provided, however, that ~~such restriction on acquisitions will not be applicable with respect to~~ notwithstanding the ~~acquisition by the Investor Affiliates~~ provisions of ~~Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in~~ this Section ~~4.2(d) hereof is not true and correct~~3.1(a), ~~(ii)~~ if the number of Ordinary Shares is reduced or if the aggregate ownership of such Standstill Parties is increased as a result of a repurchase by the Company of Ordinary Shares, a share split, dividend or a recapitalization of the Company, the Standstill Parties shall not be required to dispose of any ~~stock splits, stock dividends~~ of their holdings of Ordinary Shares even though such action resulted in the Standstill Parties’ legal or beneficial ownership totaling more than the Standstill Limit; (b) make or publicly promote or publicly support a tender or other ~~distributions~~ offer or ~~recapitalizations~~ proposal by any other Person or ~~similar offerings made generally available by~~ group (an “Offeror”), the ~~Issuer or any Subsidiary thereof to holders~~ consummation of ~~Issuer Common Stock (or other equity securities~~ which would result in a Change of Control of the ~~Issuer~~Company (an “Acquisition Proposal”)~~, including rights offerings and distributions made generally~~ ; (c) solicit in writing proxies or consents (as such terms are defined in Regulation 14A under the Exchange Act) or become a participant in a written solicitation in opposition to ~~holders~~ the recommendation of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the ~~Non-Investor Directors. (b) Notwithstanding the provisions~~ Company’s Board of ~~Section 1.1(a), at~~ Directors with respect to any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable theretomatter; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: publicly propose (i) ~~enter into~~ any merger, consolidation, business combination, tender offer, purchase of all or ~~agree, effect~~ substantially all of the Company’s assets or ~~seek, offer or propose (whether publicly or otherwise) to effect~~businesses, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination similar transaction involving the ~~Issuer or any Subsidiary thereof~~ Company or (~~y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C~~ii) any recapitalization, restructuring, ~~liquidation, dissolution~~ liquidation or other extraordinary transaction with respect to ~~Issuer or any~~ the Company, in each case, in opposition to the recommendation of ~~its Subsidiaries~~a majority of the Company’s Board of Directors; (iie) ~~except as provided~~ deposit any Ordinary Shares in ~~Article 3, make~~ a voting trust or ~~participate in, directly~~ subject any Ordinary Shares to any arrangement or ~~indirectly, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek to advise or influence any Person or entity~~ agreement with respect to the voting ~~of, any Issuer Common Stock or any demand for a copy~~ of Issuer’s stock ledger, list of stockholders or any other books and records of Issuer (other than with respect to matters related to the Investor’s exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rules; (iii) call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders, form, join or in any way participate Ordinary Shares in a 13D Group or otherwise act in concert with any Person, in each case, with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except manner that this subsection does not restrict (x) the Investor Directors from participating as members of the Issuer Board and any committees thereof in their capacity as such and (y) the Investor from joining or in any way participating in a 13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B); (iv) take any action which would or ~~would~~ could reasonably be expected to ~~force Issuer~~ allow any Third Party to ~~make a public announcement regarding~~ take any ~~of the types of matters set forth~~ action in ~~clause~~ clauses (ib) through (d) above; (~~v) bring any action, or otherwise act, to contest the validity of this Section 1.1(d); or (vi~~f) enter into ~~any discussions~~ detailed negotiations, arrangements or ~~arrangements~~ agreements with any third party with respect to any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) Person (other than the ~~provisions~~ Company) relating to any actions prohibited in clauses (a) through (e) above. provided, however, that (A) the mere voting of ~~Section 1.1(d)(i)) will terminate upon the expiration~~ any voting securities of the ~~Restricted Period. For~~ Company held by the ~~avoidance~~ Investor or its Affiliates and Permitted Transferees, or the mere acceptance of ~~doubt~~a tender, exchange or other offer, shall not constitute a violation of any ~~tolling~~ of ~~such restrictions pursuant to Section 1.1(f~~clauses (a) ~~will not result in any extension of the period referred to in the previous sentence.~~ through (f) ~~The~~ above, and (B) the restrictions ~~set forth in~~ contemplated by this Section ~~1.1(d) (other than the provisions of Section 1.1(d)(i))~~ 3.1 [***] shall not apply (to brokerage, investment advisory, financial/merger advisory, financing, asset management, trading, market making, arbitrage, principal investing and ~~the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, that,~~ other similar activities conducted in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made with the approval of the Issuer Board; (iii) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (y) if so nominated are not so elected to the Issuer Board, or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (A) above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (E) make a general assignment for the benefit of creditors. (g) So long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), the Issuer agrees not to enter into any agreement regarding a (i) merger, (ii) consolidation, (iii) Change of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d), and so long as the Investor Percentage Interest is equal to or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of the business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the ~~Issuer with respect to such proposed transaction or a competing proposal by~~ Investor and its Affiliates (excluding the ~~Investor~~Orange [***]).

Appears in 1 contract

Samples: Investor Agreement (Yandex N.V.)

Standstill. (a) ~~From~~ During the period commencing at the Effective Time and ~~after~~ ending on the ~~date~~ Standstill Termination Date (as defined below) (the “Standstill Period”), provided that the Company is not in breach of its obligations under this Agreement (including Section 1 hereof), each of the ~~Investor will~~ Principal Stockholders shall not, and ~~will~~ shall cause ~~each Investor Affiliate~~ its controlled Affiliates not to, directly or indirectly, acquire Beneficial Ownership of shares of Issuer Common Stock, including for purposes of this Section 1.1(a), rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value (in whole or in part) from such Issuer Common Stock, if, after giving effect to such acquisition, the Investor’s Investor Percentage Interest would exceed the Cap; provided, however, that such restriction on acquisitions will not be applicable with respect to the acquisition by the Investor Affiliates of Beneficial Ownership of Issuer Common Stock (i) pursuant to the Purchase Agreement (unless, for the avoidance of doubt, the representation of the Investor in Section 4.2(d) hereof is not true and correct), (ii) as a result of any stock splits, stock dividends or other distributions or recapitalizations or similar offerings made generally available by the Issuer or any Subsidiary thereof to holders of Issuer Common Stock (or other equity securities of the Issuer), including rights offerings and distributions made generally to holders of Issuer Common Stock (or other equity securities of the Issuer) as a result of their ownership of Issuer Common Stock (or other equity securities of the Issuer) including pursuant to a shareholder rights plan or similar plan or agreement, (iii) as a result of the exercise (or exchange) of any rights distributed by the Issuer pursuant to clause (ii) above, (iv) in accordance with a Permitted Offer or (v) which has been approved by a majority of the Non-Investor Directors. (b) Notwithstanding the provisions of Section 1.1(a), at any time following the earlier of (x) ten (10) days following the date any Third Party commences (within the meaning of Section 14(d) of the Exchange Act) a tender or exchange offer which, if consummated, would result in such Person becoming the Beneficial Owner of Issuer Common Stock (or other equity securities) having Majority Voting Power (such offer, a “Third Party Offer”), unless during such ten (10) day period, the Issuer Board takes such actions as are reasonably necessary to prevent, delay, or restrict the purchase of Issuer Common Stock (or other equity securities) pursuant to such Third Party Offer, including implementation of a shareholder rights plan and other customary defensive actions, (y) the date Issuer publicly recommends a Third Party Offer or takes any action inconsistent with actions previously taken pursuant to clause (x) (including granting an exception in respect of such Third Party Offer under any shareholder rights plan or granting approval of such offeror for purposes of DGCL Section 203), and (z) at any time following December 31, 2016, so long as, in the case of an action pursuant to this clause (z), Investor has, subsequent to such date, negotiated in good faith with the Issuer Board for a period of at least thirty (30) days as to the terms of such proposed offer, then in each case, the Investor Affiliates will be entitled to commence and accept for purchase and purchase shares of Issuer Common Stock pursuant to a tender or exchange offer so long as such tender or exchange offer (such tender or exchange offer meeting the requirements set forth in this Section 1.1(b), a “Permitted Offer”): (i) is commenced and made in accordance with the applicable rules and regulations under the Exchange Act applicable to tender or exchange offers, including, if applicable, Section 13(e)-3 of the Exchange Act and the related rules and regulations applicable thereto; (ii) is made to all holders of Issuer Common Stock; (iii) will expire no earlier than midnight, New York City time, on the twentieth (20th) business day following the commencement thereof (as determined using Rule 14d-1(g)(3) under the Exchange Act); (iv) is subject to customary conditions to the obligation of the Investor Affiliates to purchase Issuer Common Stock; provided, that, (A) in the event a Permitted Offer is made pursuant to clause (z) of Section 1.1(b) and no Third Party Offer is commenced or made during the period such Permitted Offer is outstanding, it will be a condition to closing of such Permitted Offer that the number of shares of Issuer Common Stock tendered and not withdrawn, when purchased by the Investor Affiliates, constitute no less than a majority of the outstanding shares of Issuer Common Stock outstanding at the time of commencement that are not Beneficially Owned by the Investor Affiliates as of the date such Permitted Offer is commenced, disregarding for purposes of calculating the number of outstanding shares of Issuer Common Stock any such shares issued pursuant to Section 1.5(e) (such condition, the “Minimum Condition”) and (B) any conditions to the consummation of such offer may be waived by the Investor in its sole discretion, other than, in the event no Third Party Offer is outstanding or is made, in each case, during the pendency of such Permitted Offer, the Minimum Condition; and (v) provides for consideration payable in cash, common stock or other securities of the Investor or a Subsidiary thereof, or a combination thereof; provided, that, such consideration offered has, on a per share of Issuer Common Stock basis, a fair market value (as determined in good faith by the Investor’s board of directors) equal to or greater than the closing price of the Issuer Common Stock on Nasdaq on the Trading Day immediately prior to the earlier of (x) the public announcement of such Permitted Offer and (y) commencement of such Permitted Offer. (c) In the event the Investor Affiliates make a Permitted Offer, the Issuer will furnish the Investor Affiliates with all information concerning the Issuer required by the Exchange Act to be included in the applicable offering document for such Permitted Offer. (d) Except as provided in or permitted by Sections 1.1(b), (e), (f), (g) and (h) unless specifically approved in writing by Issuer, the Investor will not, and will cause each Investor Affiliate and its and their respective Representatives acting on behalf of Investor or any Investor Affiliate not to, in any manner, directly or indirectly: (i) ~~enter into or agree, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or~~ engage in any ~~way assist, facilitate~~ hostile or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in: (A) except to the extent otherwise specifically permitted by this Agreement, any acquisition of any Issuer Common Stock (or Beneficial Ownership thereof) or any material portion of the assets of Issuer and its Subsidiaries (taken together); (B) any tender or exchange offer, merger or other business combination involving Issuer or any of its Subsidiaries (provided, that, this clause does not restrict any Investor Affiliate from (x) opposing publicly or privately any tender or exchange offer, merger or other business combination involving the Issuer or any Subsidiary thereof or (y) Transferring any shares of Issuer Common Stock pursuant to such tender or exchange offer, merger or other business combination); or (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction takeover activities with respect to ~~Issuer~~ the Company (including by means of a tender offer or ~~any of its Subsidiaries~~soliciting proxies or written consents, other than as recommended by the Board); (ii) ~~except~~ acquire or propose to acquire additional Common Stock or other securities of the Company or any securities of its subsidiaries; provided, however, that the foregoing shall not prohibit the acquisition or proposal to acquire additional Common Stock or other Company securities that in the aggregate, together with such Party’s and its Affiliates’ beneficial ownership of any other Common Stock or other securities of the Company, does not cause such Party’s and its Affiliates’ aggregate beneficial ownership to exceed nineteen and ninety-nine hundredths percent (19.99%) of either the outstanding Common Stock or the voting power of the outstanding securities of the Company; provided, further, that the foregoing shall not prohibit and the Principal Stockholders shall have the right to participate pro rata, based on their respective beneficial ownership percentage of the outstanding Common Stock, in any equity capital raise by the Company or any of its subsidiaries; (iii) call a special meeting of the Stockholders; or (iv) seek additional representation on the Board or propose to nominate or remove, or vote to remove, any Directors of the Company (other than such Party’s Designated Directors, as ~~provided~~ applicable, in ~~Article 3~~accordance with Section 1). (b) Specifically, ~~make~~ but without limiting Section 3(a), during the period commencing at the Effective Time and ending on the Standstill Termination Date, without the prior written consent of the Company, each of the Principal Stockholders shall not, and shall cause its controlled Affiliates not to, directly or ~~participate in~~indirectly: (i) propose to enter into, directly or indirectly, any merger, consolidation, recapitalization, business combination, partnership, joint venture, acquisition or similar transaction involving the Company or any of its Affiliates or their properties, except as expressly permitted hereby; (ii) make or in any way participate in any “solicitation” of “proxies” (as such terms are ~~defined under~~ used in Rule 14a-1 of Regulation 14A under the Exchange Act) or written consents to vote, or seek to influence, or advise ~~or influence any Person or entity~~ others with respect to the voting ~~of,~~ of any ~~Issuer Common Stock~~ voting securities of the Company or any ~~demand for a copy~~ of ~~Issuer’s stock ledger, list of stockholders or any other books and records of Issuer~~ its Affiliates (other than ~~with respect to matters related to the Investor~~in a Designated Director’s ~~exercise or enforcement of rights under the Purchase Agreement), except that this subsection does not restrict (A) the Investor Directors from participating~~ capacity as ~~members~~ a member of the Issuer Board and any committees thereof in their capacity as such or (B) the Investor Affiliates from opposing publicly or privately, or voting against or encouraging others to vote against, (x) any proposal of a third party regarding a merger or other business combination involving the Issuer or any Subsidiary thereof or (y) other similar corporate transaction on which a vote of the Issuer’s stockholders is required under Delaware Law or Nasdaq rulesBoard); (iii) ~~call or seek to call a meeting of Issuer’s stockholders or initiate any stockholder proposal for action by Issuer’s stockholders,~~ form, join or ~~in any way~~ participate in a ~~13D Group or otherwise act in concert with any Person, in each case,~~ “group” (within the meaning of Section 13(d) of the Exchange Act) with respect to the Issuer Common Stock, or seek, propose or otherwise act alone or in concert with others, to influence or control Issuer’s management, the Issuer Board or policies, except that this subsection does not restrict (x) the Investor Directors from participating as members any voting securities of the ~~Issuer Board and~~ Company or any ~~committees thereof in their capacity~~ of its Affiliates (other than any group that may have been formed among the Principal Stockholders as ~~such and (y) the Investor from joining or in any way participating in~~ a ~~13D Group or otherwise acting in concert with any Person, in each case, to exercise its rights under Section 1.1(d)(ii)(B~~result of this Agreement); (iv) ~~take any action which would~~ act to seek to control or ~~would reasonably be expected to force Issuer to make a public announcement regarding any~~ influence the management, Board or policies of the ~~types of matters set forth in clause (i) above~~Company, except through such Party’s applicable Designated Directors or as permitted by Section 3(c); (v) ~~bring any action~~propose to remove, or ~~otherwise act~~vote to remove, any Directors of the Company (other than pursuant to ~~contest~~ the ~~validity~~ exercise of such Party’s right to nominate Designated Directors pursuant to Section 1); (vi) publicly disclose any intent, plan or arrangement inconsistent with this Agreement; or (vii) advise, assist, publicly propose or encourage others in connection with the above. (c) Notwithstanding the foregoing provisions of this Section ~~1.1(d)~~3, the foregoing provisions shall not, and are not intended to: (i) prohibit the ACII Entities or their respective Affiliates from providing the Company or its Affiliates assistance with operational and managerial matters or financial advisory services consistent with past practices; (ii) prohibit any Principal Stockholder or its controlled Affiliates from privately communicating with, including making any offer or proposal to, the Board; (iii) restrict in any manner how any Principal Stockholder or its controlled Affiliates vote their Common Stock or other Company securities, except as provided in Section 2; (iv) restrict the manner in which any Designated Director may (A) vote on any matter submitted to the Board or the Stockholders, (B) participate in deliberations or discussions of theBoard (including making suggestions or raising issues to the Board) in his or her capacity as a member of the Board, or (C) take actions required by his or her exercise of legal duties and obligations as a member of the Board or refrain from taking any action prohibited by his or her legal duties and obligations as a member of the Board; (v) restrict any Principal Stockholder or any of its Affiliates from selling or transferring any of their Company securities; or (vi) ~~enter into any discussions~~ limit, restrict or ~~arrangements with any third party with respect to~~ impair the Principal Stockholders or any of the foregoing (except as otherwise expressly provided herein). (e) Unless earlier terminated or made inapplicable pursuant to Section 1.1(f), the provisions of Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) will terminate upon the expiration of the Restricted Period. For the avoidance of doubt, any tolling of such restrictions pursuant to Section 1.1(f) will not result in any extension of the period referred to in the previous sentence. (f) The restrictions set forth in Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) shall not apply (and the Investor will be permitted to take the actions otherwise prohibited thereunder) if any of the following occurs (provided, thattheir respective Affiliates’ ability, in the event any matter described in clauses (i) or (ii) of this Section 1.1(f) has occurred and resulted in the restrictions imposed under Section 1.1(d) (other than the provisions of Section 1.1(d)(i)) ceasing to apply to the Investor, then, in the event the transaction related to such matter has not occurred within six (6) months of the date on which the Investor was released from such restrictions, then so long as such transaction is not being actively pursued at such time, the restrictions set forth in Section 1.1(d) shall thereafter resume and continue to apply in accordance connection with their terms, until terminated pursuant to Section 1.1(e) or subsequently made inapplicable pursuant to this Section 1.1(f)): (i) in the event that a tender offer or exchange offer for at least thirty-five percent (35%) of the Issuer Common Stock is commenced (within the meaning of Section 14(d) of the Exchange Act) by a third Person which, for the avoidance of doubt, is not an Investor Affiliate (and not involving any breach of Section 1.1(d)) which tender offer or exchange offer, if consummated, would result in such third party (or any 13D Group of which such third party is a member) becoming the Beneficial Owner of securities representing greater than either thirty-five percent (35%) of the outstanding shares of Issuer Common Stock or thirty-five percent (35%) of the voting power of the Issuer, and either (1) the Issuer Board recommends that the stockholders of the Issuer tender their shares in response to such offer or does not recommend against the tender offer or exchange offer within ten (10) days after the commencement thereof or such longer period as shall then be permitted under U.S. federal securities laws or (2) the Issuer Board later publicly recommends that the stockholders of the Issuer tender their shares in response to such offer; (ii) the Issuer solicits from one or more Persons, or enters into substantive discussions with one or more Persons regarding, a proposal with respect to a Change of Control Transaction, or the Issuer makes a public announcement that it is seeking to sell itself and, in such event, such announcement is made action conducted with the approval of the ~~Issuer Board;~~ Board (~~iii~~provided that no such Board approval shall be required with respect to clauses (D) subject to the obligations of the Investor under Section 3.2, in the event that the Persons designated by the Investor to be elected or appointed to the Issuer Board as Investor Directors pursuant to Article 3 hereof are either (x) not appointed to the Issuer Board as contemplated herein or nominated for inclusion on management’s slate of nominees for election to the Issuer Board at any Election Meeting or (yE) ~~if so nominated are not so elected~~ below), to ~~the Issuer Board,~~ directly or the Issuer otherwise breaches its obligations under Article 3; (iv) the Investor Percentage Interest is less than ten percent (10%); (v) the Investor Percentage Interest is greater than fifty percent (50%); (vi) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization or other relief in respect of the Issuer or any material Subsidiary or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect or (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer or any material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or (vii) the Issuer or any material Subsidiary shall indirectly (A) ~~voluntarily commence any proceeding or file any petition seeking liquidation~~propose, ~~reorganization~~ commit on, participate in and/or make a loan or other ~~relief under~~ debt financing to the Company or any ~~federal, state or foreign bankruptcy, insolvency, receivership or similar Law now or hereafter in effect~~of its subsidiaries, (B) ~~consent~~ propose, commit on, participate in and/or provide debt financing to a prospective buyer regarding the Company or any of its subsidiaries or assets in a negotiated transaction with the Company, finance a third party’s effort to make a loan or other debt financing to the ~~institution of,~~ Company or ~~fail to contest~~ any of its subsidiaries in a ~~timely and appropriate manner,~~ negotiated transaction with the Company or any ~~proceeding or petition described in clause (A) above~~of its subsidiaries, (C) ~~apply for or consent~~ participate in any process conducted pursuant to which the ~~appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Issuer~~ Company or any ~~material Subsidiary or for a substantial part~~ of its ~~assets~~subsidiaries proposes to issue any additional equity interests, arrange for any debt financing or in which any of the businesses or assets of the Company or any of its subsidiaries are proposed to be sold or otherwise disposed of, in each case in accordance with the parameters of such process, (D) ~~file an answer admitting~~ submit a proposal to the ~~material allegations~~ Board relating to the acquisition of all or substantially all of the assets or equity of the Company and its subsidiaries if the Company has entered into a ~~petition filed against it in any such proceeding,~~ definitive agreement with respect to the sale of all or substantially all of the assets or equity of the Company and its subsidiaries or (E) ~~make a general assignment for~~ purchase debt of the ~~benefit of creditors.~~ Company or its subsidiaries in secondary market transactions. The term “debt” as used in this paragraph shall include institutional debt (~~g) So long as the Investor Percentage Interest is equal to~~ bank or ~~greater than fifteen percent (15%~~otherwise), ~~the Issuer agrees not to enter into any agreement regarding a (i) merger~~commercial paper, ~~(ii) consolidation~~notes, ~~(iii) Change~~ debentures, bonds, other evidences of Control Transaction, or (iv) other business combination transaction unless, in each case, at least ten (10) days prior to the execution of such agreement, the Issuer has given Investor written notice of its intention to enter into such agreement. (h) Notwithstanding the provisions of Section 1.1(d)indebtedness, and ~~so long as the Investor Percentage Interest is equal to~~ debt securities, but shall not include any debt convertible or greater than fifteen percent (15%), in the event (i) the Issuer solicits from one or more Persons or enters into substantive discussions with one or more Persons regarding a proposal with respect to (x) a Change of Control Transaction or (y) a sale of a material portion of the Issuer’s assets outside the ordinary course of business or (ii) the Issuer provides any notice to Investor pursuant to Section 1.1(g), in each case, Investor will be entitled to engage in private discussions with, and make private proposals to, the Issuer Board or management of the Issuer with respect to such proposed transaction or a competing proposal by the Investorexchangeable for equity.

Appears in 1 contract

Samples: Nomination and Director Voting Agreement (Axar Capital Management L.P.)

Common use of Standstill Clause in Contracts