(xiv) lend money to any Person (other than to the Company or to Wholly Owned Subsidiaries, or advances for business expenses to employees in the ordinary course of business) or incur or guarantee any Indebtedness for borrowed money (other than (a) from the Company or its Subsidiaries or (b) pursuant to the Existing Credit Agreement); or
(xv) commit or agree to do or authorize any of the foregoing.
(b) Nothing contained in this Agreement shall give to Parent, Merger Sub 1 or Merger Sub 2, directly or indirectly, rights to control or direct the operations of the Company or its Subsidiaries prior to the Closing Date. Prior to the Closing Date, the Company and its Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of its and its Subsidiaries’ operations.
Section 5.2. Notice of Breach. From and after the date hereof and until the earlier to occur of the Closing Date or the termination of this Agreement pursuant to Article IX hereof, the Company shall promptly give written notice with reasonable particularity upon having Knowledge of any matter that may constitute a material breach of any representation, warranty, agreement or covenant of the Company contained in this Agreement that would reasonably be expected to cause any conditions to Closing set forth in Section 8.2(a) or (b) to not be satisfied; provided, however, that Company’s breach of its obligations pursuant to this Section 5.2 shall not cause the condition to Closing set forth in Section 8.2(b) to not be satisfied.
ARTICLE VI
COVENANTS OF PARENT, MERGER SUB 1 AND MERGER SUB 2
Section 6.1. Conduct of the Business Before the Closing Date.
(a) Parent covenants and agrees that, during the period from the execution of this Agreement to the earlier of the termination of this Agreement in accordance with its terms and the Effective Time (except (w) as set forth in Section 6.1 of the Parent Disclosure Letter, (x) as required by Law, (y) for any actions taken reasonably and in good faith to respond to any COVID-19 Measures, or (z) otherwise specifically contemplated by the terms of this Agreement, provided, that, with respect to actions taken or omitted to be taken in reliance on clause (y), to the extent permitted under applicable Law and practicable under the circumstances, Parent shall provide prior notice to and consult in good faith with the Company prior to taking such action), unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), Parent shall: (A) use reasonable best efforts to conduct the business of Parent and its Subsidiaries, in all material respects, in the ordinary course of business and in a manner consistent with past practice; (B) use reasonable best efforts to conduct the business of Parent and its Subsidiaries, in all material respects, in compliance with applicable Laws, including without limitation the timely filing of all reports, forms or other documents with the SEC required pursuant to the Securities Act, the Exchange Act or the Sarbanes-Oxley Act, as well as the timely filing of all reports, forms and other documents, and payment of all applicable regulatory fees and assessments, under applicable state and federal law; (C) use reasonable best efforts to maintain, in all material respects, the assets, properties, rights and operations of Parent and its Subsidiaries in accordance with present practice in a condition suitable for their current use; and (D) use reasonable best efforts to preserve substantially intact the business organization of Parent and its Subsidiaries, to keep available the services of the present officers of Parent and its Subsidiaries and to preserve, in all material respects, the present relationships of Parent and its Subsidiaries with persons with which the Company or any of its Subsidiaries has significant business relations, it being agreed that with respect to the matters specifically addressed by any provision of clauses (i) through (ix) of this Section 6.1(a) below, such specific provisions shall govern over the more general provisions of the foregoing clauses (A) through (D) of this Section 6.1(a). Without limiting the generality of the foregoing, neither Parent nor any of its Subsidiaries shall (except (w) as specifically contemplated by the terms of this Agreement, (x) as set forth on Schedule 6.1(a) of the Parent Disclosure Letter, (y) as required by Law, or (z) for any actions taken reasonably and in good faith to respond to any COVID-19 Measures, provided, that,
A-39
with respect to actions taken or omitted to be taken in reliance on clause (z), to the extent permitted under applicable Law and practicable under the circumstances, Parent shall provide prior notice to and consult in good faith with the Company prior to taking such action), between the execution of this Agreement and the earlier of the termination of this Agreement in accordance with its terms and the Effective Time, directly or indirectly do, any of the following without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed):
(i) make, in the case of Parent, Merger Sub 1 or Merger Sub 2, any change in any of its organizational documents; issue any additional shares of capital stock, limited liability company interests or partnership interests or other equity securities or grant any option, warrant or right to acquire any capital stock, limited liability company interests or partnership interests or other equity securities or issue any security convertible into or exchangeable for such securities or alter in any way any of its outstanding securities or make any change in outstanding shares of capital stock, limited liability company interests or partnership interests or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise; except, in each case, for (A) grants of stock options, restricted stock units or other equity incentives under the Parent Equity Plan in the ordinary course of business consistent with past practice, (B) shares of Parent Common Stock issuable upon exercise of restricted stock units or stock options, in each case, outstanding on the date hereof or issued in accordance with this Section 6.1(a), and (C) shares of Parent Common Stock issuable to directors of Parent in accordance with Parent’s director compensation plans;
(ii) redeem, retire, purchase or otherwise acquire, directly or indirectly, any shares of the capital stock, limited liability company interests or partnership interests or other ownership interests of Parent and its Subsidiaries or declare, set aside or pay any dividends or other distribution in respect of such shares or interests of Parent other than (A) the purchase, redemption or other acquisition of Parent Common Stock or any Parent Equity Award from current or former employees of Parent or any of its Subsidiaries as permitted or contemplated by the terms of any employment or option agreement or Parent Benefit Plan, (B) required Tax withholding in connection with the vesting, settlement and/or exercise of any Parent Equity Award, (C) forfeitures of any Parent Equity Award pursuant to their terms in effect on the date of this Agreement and (D) redemptions or repurchases of Parent Common Stock pursuant to Parent’s previously announced share repurchase program for an amount not exceeding 2,000,000 shares of Parent Common Stock;
(iii) acquire any material assets, or properties (including any real property), or enter into any other transaction, that would reasonably be expected to (A) prevent, materially hinder or materially delay the receipt of the necessary or required waiting period expirations or terminations, consents, approvals and authorizations for the transactions contemplated by this Agreement under the HSR Act or any Regulatory Law, or any other authorization, consent, order, declaration or approval of any Governmental Entity necessary to consummate the transactions contemplated by this Agreement, (B) materially increase the risk of any Governmental Entity entering an Order prohibiting the consummation of the transactions contemplated by this Agreement, or (C) materially increase the risk of not being able to remove any such Order on appeal or otherwise;
(iv) make any change in any method of accounting or accounting principle, method, estimate or practice except for any such change required by reason of a concurrent change in GAAP, or write off as uncollectible any material accounts receivable except in the ordinary course of business and consistent with past practice;
(v) (A) make or change any material Tax election, (B) change an annual accounting period, (C) file any amended material Tax Return, (D) enter into any closing agreement with respect to a material unreserved amount of Tax, (E) settle any material unreserved Tax claim or assessment relating to Parent or any of its Subsidiaries, or (F) surrender any right to claim a refund of material Taxes, in each case, other than in the ordinary course of business consistent with past practice, without consultations with the Company;
A-40
(vi) take any action, or knowingly fail to take any action, which action or failure to act would or would be reasonably expected to prevent or impede the Combination, taken together, from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(vii) liquidate (completely or partially), dissolve or adopt any plan or resolution providing for any such liquidation or dissolution, in each case, with respect to Parent, Merger Sub
1 or Merger Sub 2;
(viii) incur or guarantee any Indebtedness for borrowed money (other than from Parent or its Wholly Owned Subsidiaries or pursuant to the Financing or under Parent’s existing credit agreement); or
(ix) commit or agree to do or authorize any of the foregoing.
(b) Nothing contained in this Agreement shall give to the Company, directly or indirectly, rights to control or direct the operations of Parent or its Subsidiaries prior to the Closing Date. Prior to the Closing Date, Parent and its Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of its and its Subsidiaries’ operations.
Section 6.2. Employee Benefits.
(a) For the period commencing on the Effective Time and ending on the one year anniversary of the Closing Date (the “Continuation Period”), Parent agrees that each employee of the Company or its Subsidiaries who shall have been an employee of the Company or its Subsidiaries as of the Effective Time (each, a “Continuing Company Employee”), while such Continuing Company Employee remains employed by Parent or any of its Subsidiaries (including, after the Effective Time, the Company and its Subsidiaries), shall be eligible to receive employee benefits that are substantially comparable in the aggregate to either, at the sole discretion of Parent: (i) participation in Parent’s employee benefit plans and programs, including any defined contribution plan, bonus plan, profit sharing plan, medical plan, dental plan, life insurance plan, time off programs and disability plan (excluding any equity- or equity-based incentive plan and defined benefit plan), in each case to the same extent as similarly situated employees of Parent or its Subsidiaries; or (ii) continued participation in employee benefit plans, programs and policies of the Company and its Subsidiaries which provide benefits that are no less favorable in the aggregate to the benefits (excluding equity- or equity-based compensation) provided to such Continuing Company Employee under the Company Benefit Plans immediately prior to the Closing Date; provided that nothing in this Section 6.2(a) shall prevent Parent from enrolling any Continuing Company Employee in a mix of employee benefit plans or programs comprised of both plans or policies of Parent and Company Benefit Plan during the Continuation Period; provided that the conditions and requirements under both of the foregoing clauses (i) and (ii) are met.
(b) Parent agrees that any Continuing Company Employee whose employment is terminated by the First Surviving Corporation without “cause” (as defined in Company’s Change in Control Severance Benefit Plan) during the Continuation Period, other than an employee who is party to an individual employment agreement or other Contract which provides for the payment of severance, will be entitled to cash severance benefits that are no less favorable, and welfare benefits that are no less favorable in the aggregate, in each case than the cash severance benefits and welfare benefits, respectively, if any, determined in accordance with the terms of the Company’s separation guidelines, effective as of March 2020, subject to such employee providing a timely and effective release of claims in favor of Parent, the First Surviving Corporation and their respective Affiliates. For purposes of clarity, upon and following the Closing, Parent will assume and honor the Company’s Change in Control Severance Benefit Plan in accordance with its terms.
(c) With respect to any Company Benefit Plan or Parent Benefit Plan in which any Continuing Company Employee first becomes eligible to participate on or after the Effective Time (collectively, the “New Plans”), each Continuing Company Employee shall, to the extent permitted by applicable Law, receive full credit for the years of continuous service by such Continuing Company Employee recognized by the Company or its
A-41
Subsidiaries prior to the Effective Time pursuant to a Company Benefit Plan to the same extent as if it were service with Parent for purposes of (i) satisfying the service requirements for eligibility to participate in each such New Plan, (ii) vesting in any benefits under each such New Plan, and (iii) calculating the level of benefits with respect to severance, non-statutory vacation, personal days off and any other non-statutory welfare-type benefits with respect to which a Continuing Company Employee may be eligible, where service is a factor in calculating benefits, provided that, none of the foregoing shall apply with respect to defined benefit pension plans benefit accrual, equity- or equity-based incentives, or otherwise where such credit would result in a duplication of benefits or where such services were not recognized under the corresponding Company Benefit Plan. With respect to any New Plan that is a welfare benefit plan in which any Continuing Company Employees first become eligible to participate on or after the Effective Time, subject to any applicable plan provisions, contractual requirements or Laws, Parent shall use reasonable best efforts to (A) cause to be waived any waiting periods, eligibility requirements, pre-existing condition limitations, physical examination requirements, evidence of insurability requirements, actively-at-work or similar requirements, except to the extent such requirements or conditions would apply under the analogous Company Benefit Plan in which any such Continuing Company Employee was a participant or eligible to participate as of immediately prior to the Effective Time, and (B) give effect, in determining any deductibles, co-pay, co-insurance, or maximum out of pocket limitations, to amounts paid by such Continuing Company Employees prior to the Effective Time under a Company Benefit Plan in which any such Continuing Company Employee was a participant as of immediately prior to the Effective Time (to the same extent that such credit was given under such Company Benefit Plan prior to the Effective Time) in satisfying such requirements during the plan year in which the Effective Time occurs.
(d) If requested by Parent at least ten Business Days prior to the Closing Date, the Company shall take (or cause to be taken) all actions reasonably necessary pursuant to resolutions of the Company Board of Directors necessary or appropriate to terminate, effective no later than the day prior to the Closing Date, any defined contribution Company Benefit Plan that contains a cash or deferred arrangement intended to qualify under Section 401(k) of the Code (a “Company Defined Contribution Plan”). If the Company is required to terminate any Company Defined Contribution Plan, then the Company shall provide to Parent prior to the Closing Date written evidence of the adoption by the Company Board of Directors of resolutions authorizing the termination of such Company Defined Contribution Plan (the form and substance of which resolutions shall be subject to the prior review and approval of Parent, which approval shall not be unreasonably withheld or delayed).
(e) Prior to making any written or oral communications to the Continuing Company Employees pertaining to compensation or benefit matters that are affected by the transactions contemplated by this Agreement, the Company shall provide Parent with a copy of the intended communication, Parent shall have a reasonable period of time to review and comment on the communication, and Parent and the Company shall cooperate in providing any such mutually agreeable communication.
(f) The Company shall, as soon as reasonably practicable following the date hereof, provide Parent with the then-most recent calculations and reasonable back-up information relating to Sections 280G and 4999 of the Code relating to the Merger, including any non-compete valuations, once such calculations and information becomes available to the Company following the date hereof and no later than ten (10) Business Days prior to the Closing Date. The Company shall not provide any tax indemnification or “gross up” to any employee of the Company for any tax or penalty that becomes payable under Sections 280G and 4999 of the Code.
(g) Nothing contained in this Section 6.2 or any other provision of this Agreement, express or implied: (i) shall be construed to establish, amend, or modify any benefit plan, program, agreement or arrangement, including without limitation, any Company Benefit Plan or any Parent Benefit Plan, (ii) shall alter or limit the ability of any of Parent, the Company, or any of their respective Subsidiaries to amend, modify or terminate any benefit plan, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them, (iii) is intended to confer upon any current or former employee or other individual service provider any right to employment or continued employment for any period of time by reason of this Agreement, or any right to a particular term or condition of employment, or (iv) is intended to confer upon any Person (including for
A-42
the avoidance of doubt any current or former employee, director, officer or other service provider or any participant in a Company Benefit Plan or other employee benefit plan, agreement or other arrangement) any right as a third-party beneficiary of this Agreement.
Section 6.3. Indemnification Continuation.
(a) For purposes of this Section 6.3, (i) “Indemnified Person” shall mean any person who is now, or has been at any time prior to the Effective Time, (x) an officer or director of the Company or any of its Subsidiaries or (y) serving at the request of the Company as an officer or director of another corporation, joint venture or other enterprise or general partner of any partnership or a trustee of any trust, and (ii) “Proceeding” shall mean any claim, action, suit, proceeding or investigation.
(b) From and after the Effective Time, Parent shall cause the Surviving Corporation and its Subsidiaries to the fullest extent permitted by applicable Law, (i) to provide indemnification to each Indemnified Person to the same extent and under the same conditions and procedures (and subject to the same conditions, including with respect to the advancement of expenses) as such Indemnified Person is entitled on the date hereof under the Company Organizational Documents (or the corresponding organizational documents of any Subsidiary of the Company) in connection with any Proceeding based directly or indirectly (in whole or in part) on, or arising directly or indirectly (in whole or in part) out of, the fact that such Indemnified Person is or was an officer or director of the Company or any of its Subsidiaries, or is or was serving at the request of the Company as an officer or director of another corporation, joint venture or other enterprise or general partner of any partnership or a trustee of any trust, whether pertaining to any matter arising before or after the Effective Time and (ii) to honor and fulfill, in all respects, the obligations of the Company and its Subsidiaries pursuant to any indemnification agreements between the Company and any of its Subsidiaries, on the one hand, and any Indemnified Person set forth on Section 6.3 of the Company Disclosure Schedule or that use the same form in all material respects as the form of indemnification agreement filed with the Company SEC Reports. An Indemnified Person shall repay the Surviving Corporation for any expenses incurred by Surviving Corporation in connection with the indemnification of such Indemnified Person pursuant to this Section 6.3 if it is ultimately determined by a court of competent jurisdiction that such Indemnified Person did not meet the standard of conduct necessary for indemnification by the Surviving Corporation as set forth in the Company Organizational Documents. The Surviving Corporation shall not amend, repeal or otherwise modify the exculpation, indemnification and advancement of expenses provisions of the Company’s and any of its Subsidiaries’ organizational documents or in any indemnification contracts of the Company or its Subsidiaries with any of their respective directors, officers or employees as in effect immediately prior to the Effective Time, in each case in any manner that would adversely affect the rights thereunder of any individuals who at the Effective Time were current or former directors, officers or employees of the Company or any of its Subsidiaries.
(c) Prior to the Effective Time, the Company shall purchase a six-year “tail” prepaid officers’ and directors’ liability insurance policy in respect of acts or omissions occurring prior to the Effective Time covering and for the benefit of each such Indemnified Person. Parent shall not terminate such policy and shall cause all obligations of the Company thereunder to be honored by it and the Surviving Corporation.
(d) The provisions of this Section 6.3 shall survive the consummation of the Merger for a period of six years and are expressly intended to benefit each of the Indemnified Persons; provided, however, that in the event that any claim or claims for indemnification are asserted or made within such six-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims.
(e) Parent shall, and shall cause the Surviving Corporation to, pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified Person in enforcing the indemnity and other obligations provided in this Section 6.3 to the same extent and under the same conditions and procedures (and subject to the same conditions, including with respect to the advancement of expenses) as such Indemnified Person is entitled on the date hereof under the Company Organizational Documents (or the corresponding organizational documents of any Subsidiary of the Company).
A-43
