ADCT » Topics » Article V Conduct Prior to the Closing

This excerpt taken from the ADCT 8-K filed Jul 25, 2005.

Article V
Conduct Prior to the Closing

 

5.1                                 Conduct of the Business.  The Company shall, and shall cause each Subsidiary to, observe each term set forth in this Section 5.1 or specifically required by this Agreement, and agrees that, except as set forth in Section 5.1 of the Disclosure Schedule or contemplated by this Agreement, from the date hereof until the Closing Date, unless otherwise consented to by Parent in writing:

 

(a)                                  The business of the Company and each Subsidiary shall be conducted only in, and none of the Company or the Subsidiaries shall take any action except in, the ordinary course of the Company’s and each Subsidiary’s business and in accordance in all material respects with all applicable laws and the Company’s and each Subsidiary’s past custom and practice;

 

(b)                                 Other than the use of cash or cash equivalents as directed by the Company’s Board of Directors (other than to employees), neither the Company nor any Subsidiary shall, directly or indirectly, do or permit to occur any of the following: (i) issue or sell any additional shares of, or any options, warrants, conversion privileges or rights of any kind to acquire any shares of its capital stock; (ii) sell, pledge, dispose of or encumber any of its assets, except in the ordinary course of business; (iii) amend or propose to amend its Charter Documents or Governing Documents; (iv) split, combine or reclassify any outstanding shares of its capital stock, or declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect to its capital stock; (v) redeem, purchase or acquire or offer to acquire any shares of its capital stock or other securities of such entity; (vi) acquire (by merger, exchange, consolidation, acquisition of stock or assets or otherwise) any interest in any

 

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corporation, partnership, joint venture or other business organization or division or material assets thereof; (vii) incur any indebtedness for borrowed money or issue any debt securities other than in the ordinary course under existing credit facilities; (viii) permit any accounts payable owed to trade creditors to remain outstanding more than 60 days except in the ordinary course; (ix) accelerate, beyond the normal collection cycle, collection of accounts receivable; (x) other than amendments to Contracts with customers made in the ordinary course, amend or modify any Contract listed on Section 3.13 of the Disclosure Schedule, or enter into any contract or agreement that otherwise would be listed on Section 3.13 of the Disclosure Schedule if such contract or agreement had been in effect on the date of this Agreement; or (xi) enter into or propose to enter into, or modify or propose to modify, any agreement, arrangement or understanding with respect to any of the matters set forth in this Section 5.1(b);

 

(c)                                  Neither the Company nor any Subsidiary shall, directly or indirectly, (i) enter into or modify any employment, severance or similar agreements or arrangements with, or grant any bonuses, salary increases, severance or termination pay to, any officers, directors or consultants, or (ii) in the case of employees who are not officers, take any action with respect to the grant of any bonuses, salary increases, severance or termination pay or with respect to any increase of benefits payable in effect on the date hereof;

 

(d)                                 Neither the Company nor any Subsidiary shall adopt or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, trust, fund or group arrangement for the benefit or welfare of any employees, or any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or arrangements for the benefit or welfare of any director;

 

(e)                                  Other than in the ordinary course of business, neither the Company nor any Subsidiary shall cancel or terminate its current insurance policies or cause any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies providing coverage equal to or greater than the coverage under the canceled, terminated or lapsed policies for substantially similar premiums are in full force and effect;

 

(f)                                    The Company and each Subsidiary shall use its best efforts to (i) preserve intact the Company’s and each Subsidiary’s business organization and goodwill, keep available the services of the Company’s and each Subsidiary’s officers and employees as a group and maintain satisfactory relationships with suppliers, distributors, customers and others having business relationships with the Company and each Subsidiary; (ii) confer on a regular and frequent basis with representatives of Parent to report operational matters and the general status of ongoing operations; (iii) not intentionally take any action which would render, or which reasonably may be expected to render, any representation or warranty made by it in this Agreement untrue at the Closing; (iv) notify Parent of any emergency or other change in the normal course of the Company’s and each Subsidiary’s business or in the operation of the Company’s and each Subsidiary’s properties and of any governmental or third party complaints, investigations or hearings (or communications indicating that the same may be contemplated); and (v) promptly notify Parent in writing if the Company or any Subsidiary shall discover that any representation

 

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