Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”): (1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available; (2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million; (5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b); (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and (B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); (7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that: (A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and (B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7); (8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business; (9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed; (10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business; (11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days; (12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; (13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials; (14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding; (15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and (16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: (A) the Fair Market Value of such assets at the date of determination; and (B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Ziff Davis Holdings Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired DebtIndebtedness), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company or any Guarantor may incur Indebtedness (including Acquired DebtIndebtedness) or the Company may issue Disqualified Stock, Stock and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.;
(b) The provisions of Notwithstanding the foregoing, Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”Indebtedness"):
(1) the incurrence by the Company and or any Guarantor of the Guarantors of Indebtedness and letters of credit under Credit Facilities Facilities, in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownGuarantors thereunder) not to exceed the greater of of:
(xi) $20.0 50.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since March 3, 2004 to repay term Indebtedness under a Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction under a Credit Facility, in each case, pursuant to Section 4.10 hereof; or
(yii) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by (i) the notes to be issued in exchange for the 6.750% Senior Notes due March 15, 2014 issued by the Company on March 3, 2004 pursuant to the registration rights agreement of the same date and any related Subsidiary Guarantees; and (ii) the related Note Guarantees notes to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementAgreement and any related Subsidiary Guarantees;
(4) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 millionexceed, at any time outstanding, the greater of (i) US$10.0 million and (ii) 2% of the Consolidated Net Tangible Assets of the Company;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under clause (a) of Section 4.09(a) 4.09 hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1513) of this Section 4.09(b);
(6) the incurrence by the Company of Indebtedness to, or the issuance of Disqualified Stock to, any Wholly Owned Restricted Subsidiary of the Company or the incurrence by any Restricted Subsidiary of the Company of Indebtedness to, or the 57 issuance of preferred stock to, the Company or any Wholly Owned Restricted Subsidiary of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesCompany; provided, however, that:
(Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not owing by the Company or a Guarantor, such Indebtedness Guarantor to a Wholly Owned Restricted Subsidiary of the Company must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(Bii) (1A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness Indebtedness, Disqualified Stock or preferred stock being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness Indebtedness, Disqualified Stock or preferred stock to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary of the Company, ; will be deemed, in each case, to constitute an incurrence of such Indebtedness or issuance of Disqualified Stock or preferred stock by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness and not for speculative purposes;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary Guarantor of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if ;
(9) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness being guaranteed is subordinated to or pari passu in the form of additional Indebtedness with the Notessame terms, then and the Guarantee shall be subordinated payment of dividends on Disqualified Stock or pari passu, as applicable, to preferred stock in the form of additional shares of the same extent class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in the Fixed Charges of the Company as the Indebtedness guaranteedaccrued;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance statutory obligations, bankers’ acceptancesbid, completion guarantees (including related performance, surety and appeal bonds and trade and standby letters of credit), performance, surety, appeal and other similar bonds in each case entered into in the ordinary course of businessbusiness and consistent with past practice;
(11) Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, Equity Interests, in accordance with the provisions of this Indenture;
(12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising to fund a purchase by the Company or a Restricted Subsidiary of ▇▇▇▇▇'▇ interest in the High Level Project pursuant to a Right of First Refusal initiated by ▇▇▇▇▇ or the Buy/Sell Option; provided, that (i) (x) the Company or such Restricted Subsidiary has accepted an offer from any Person, other than the Company or a Restricted Subsidiary, to purchase the interest in the High Level Project that is acquired from Grant at a concurrent closing for an amount not less than the purchase price payable to Grant; and (y) such Indebtedness is repaid in full at such concurrent closing from the honoring transfer of the interest in the High Level Project purchased from Grant at such closing; or (ii) there shall not have been a decrease in the rating of the Notes by a bank any Rating Agency by one or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, more Rating Categories that occurs within 90 days (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for a possible downgrade by any Rating Agency) after the date of the later of (A) notice to the public or the Rating Agencies of the intention of the Company or any of its Restricted Subsidiaries to incur Indebtedness to fund such Indebtedness is covered within five Business Days;
a purchase or (12B) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements of the Company or to fund such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter periodpurchase; and
(1613) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1613), not to exceed $35.0 US$50.0 million. .
(c) The Company shall not incurwill not, and shall will not permit any Guarantor to incurto, incur any Indebtedness (including Permitted DebtIndebtedness) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and or the applicable Note Subsidiary Guarantee on substantially identical terms; provided, however, that no Indebtedness of the Company or a Guarantor will not be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. unsecured.
(d) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt Indebtedness described in clauses (1) through (1613) above of Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, Indebtedness in any manner that complies with this Section 4.09. The accrual of interest, Indebtedness under Credit Facilities outstanding on the accretion or amortization of original issue discount, the payment of interest date on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, which Notes are first issued and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock authenticated under this Indenture will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur have been incurred pursuant to this the category of Permitted Indebtedness described in Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(14.09(b)(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personhereof.
Appears in 1 contract
Sources: Indenture (Ainsworth Lumber Co LTD)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 million 350.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by by:
(a) Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted SubsidiariesSubsidiaries (other than Indebtedness incurred pursuant to clause (4)(b) below), in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (44)(a), not to exceed $15.0 million25.0 million at any time outstanding; and
(b) purchase money obligations and Indebtedness incurred to pay Open Account Obligations to finance the purchase of inventory held for sale or lease (including rental equipment) in the ordinary course of business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4)(b), not to exceed $175.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (1310)(b), (14) or (1516) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect to workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance; provided, however, that either (a) upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence or self-insurance or (b) such reimbursement obligations or Indebtedness shall not exceed at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (10)(b), $5.0 million;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, health and other types of social security benefits, unemployment and other self-insurance obligations, bankers’ acceptances, performance, surety and bid bonds and completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(1112) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1213) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements of the Company or such any of its Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price price, earn-outs or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any Restricted Subsidiary, business, assets property or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materialsasset;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (14), not to exceed $5.0 10.0 million (or the equivalent thereof, measured at any the time outstandingof each incurrence, in applicable foreign currency);
(15) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Second Lien Debt for Indebtedness to the sole purpose of repurchasingextent the net proceeds thereof are promptly deposited in trust to defease the Notes or to satisfy and discharge this Indenture, redeeming or otherwise acquiring or retiring for value in each case in accordance with the Subordinated Notes outstanding on the date terms of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness Indebtedness, Disqualified Stock or preferred stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 25.0 million. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness Indebtedness, Disqualified Stock or preferred stock meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness Indebtedness, Disqualified Stock or preferred stock on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, Disqualified Stock or preferred stock in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 1.8 to 11.0 if such incurrence is on or prior to April 15, 2000 or 2.0 to 1.0 if such incurrence is after April 15, 2000, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The foregoing provisions of Section 4.09(a) hereof will not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor of Indebtedness and (including letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with credit, with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and its Restricted Subsidiaries thereunder) under the Secured Credit Facility; provided that the aggregate principal amount thereunder whether or of all Indebtedness (including letters of credit) outstanding under the Secured Credit Facility after giving effect to such incurrence does not drawn and revolving credit facilities measured at entry exceed an amount equal to $35.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied to permanently repay any such facility, not at the date of drawdown) not Indebtedness pursuant to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableSection 4.10 hereof;
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by the Company of Indebtedness represented by the Notes (other than any Additional Notes) and the Exchange Notes (other than any Additional Notes) and the incurrence by the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementSubsidiary Guarantees;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiariessuch Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 million10.0 million at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that is either the Existing Indebtedness or was permitted by this Indenture to be incurred under Section 4.09(a) the first paragraph hereof or clauses (2iii), (3), (4), (5), (8), (9), (13), (14iv) or (15v) of this Section 4.09(b)paragraph;
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries; provided, however, that:
that (Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Notes and (B) (1ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(9viii) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16ix) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16ix), not to exceed $35.0 10.0 million. The Company shall not incur; and
(x) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no if any such Indebtedness will ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to be contractually subordinated in right constitute an incurrence of payment to any other Indebtedness by a Restricted Subsidiary of the Company solely that was not permitted by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisthis clause (x). For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16x) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual Accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonCompany as accrued.
Appears in 1 contract
Sources: Indenture (Flo Fill Co Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Debt to Cash Flow Ratio for the Company’s most recently ended four two full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 5.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such fourtwo-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of additional Indebtedness and letters of credit under Credit Facilities in an so long as the aggregate principal amount at any one time outstanding of all Indebtedness incurred under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $50.0 million, plus the greater amount by which the FCC Debt has been reduced since the Issue Date, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the Issue Date to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof; provided, however, that the maximum amount permitted to be outstanding under this clause (x1) $20.0 million or (y) 50% shall not be deemed to limit additional Indebtedness under the Credit Facilities to the extent the incurrence of Consolidated Cash Flow for such additional Indebtedness is permitted pursuant to any of the most recently ended four full fiscal quarters for which financial statements are publicly availableother provisions of this covenant;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture Issue Date and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) or Disqualified Stock of the Company, or Indebtedness (other than intercompany Indebtedness) or preferred stock of a Restricted Subsidiary of the Company, in each case that was permitted by this Indenture to be incurred or issued under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (1411) or (1512) of this Section 4.09(b);
(65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (65);
(76) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (76);
(8) 7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(109) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance bonds, completion guarantees (including related letters of credit)bonds, performance, suretybid bonds, appeal bonds and surety bonds or other similar bonds or obligations, in each case incurred in the ordinary course of business, and any Guarantees or letters of credit functioning as or supporting any of the foregoing;
(1110) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1211) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness owed to the FCC to finance the acquisition of FCC licenses; provided that any Indebtedness incurred pursuant to this clause (11) is not recourse to the Company, any of its Restricted Subsidiaries, or any of its or their assets, other than the licenses acquired with such Indebtedness; provided further that any Indebtedness incurred pursuant to this clause (11) may be recourse to a Restricted Subsidiary of Indebtedness arising from agreements of the Company or if such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, conducts no operations and holds no assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all the license or any portion of licenses acquired with such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter periodIndebtedness; and
(1612) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1612), not to exceed $35.0 5.0 million. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor Guarantor, unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Subsidiary Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1612) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Consolidated Interest Expense of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets asset at the date of determination; and
(B) the amount of the Indebtedness of the other Person; and
(3) the principal amount of the Indebtedness, in the case of any other Indebtedness.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Restricted Subsidiary of the Guarantors Company may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount (excluding the amount of any Hedging Obligations and banking service, treasury management and other similar Obligations) at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of of: (xa) $20.0 260.0 million or and (yb) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing IndebtednessIndebtedness outstanding on the date of this Indenture (other than Indebtedness under Credit Facilities);
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture hereof and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementAgreement (and any Exchange Notes issued in exchange for Additional Notes properly incurred under this Indenture, where the terms of such Exchange Notes are substantially identical to such Additional Notes);
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an provided that the aggregate principal amountamount of any such incurrence does not cause the aggregate principal amount of Indebtedness then outstanding under this clause (4), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) $15.0 million40.0 million and (y) 7.5% of Total Assets as of the date of any such incurrence;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (914), (13), (14) or (1519) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the such Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, suretycompletion and surety bonds and completion, appeal performance and other similar bonds guarantees in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect to banking service, treasury management and other similar Obligations (including without limitation Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds or in respect of netting services, overdraft protection and otherwise in connection with deposit accounts, so long as such Indebtedness is covered within five Business Daysbusiness days);
(12) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate principal amount at any time outstanding pursuant to this clause (12), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (12), not to exceed $25.0 million (or the equivalent thereof, measured at the time of each incurrence, in applicable foreign currency);
(13) the incurrence of Indebtedness arising from any agreement entered into by the Company or any of its Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price adjustment or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, business or assets of the Company or any of its Restricted Subsidiaries or Capital Stock of a Subsidiary, other than guarantees any of its Restricted Subsidiaries; provided that the maximum aggregate liability in respect of all such Indebtedness incurred pursuant to this clause (13) shall at no time exceed the gross proceeds actually received by any Person acquiring all the Company and its Restricted Subsidiaries in connection with such acquisitions or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisitiondispositions;
(1314) the incurrence of Permitted Acquisition Debt;
(15) the incurrence of Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(16) the incurrence of Indebtedness consisting of take-or-pay obligations contained in supply agreements relating to products, services or commodities of a type that the Company or any of its Subsidiaries uses or sells in the ordinary course of business;
(17) the incurrence of Indebtedness consisting of the financing of insurance premiums;
(18) the incurrence of Indebtedness consisting of Guarantees incurred in the ordinary course of business under repurchase agreements or similar agreements in connection with the financing of sales of goods in the ordinary course of business; and
(19) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1619), not to exceed the greater of (x) $35.0 million40.0 million and (y) 7.5% of Total Assets as of the date of any such incurrence. The Company shall will not incur, and shall the Company will not permit any Guarantor to incurto, directly or indirectly, incur any Indebtedness (including Permitted Acquired Debt) that is contractually subordinated or junior in right of payment to any other Indebtedness of the Company or such Guarantor Guarantor, as the case may be, unless such Indebtedness is also contractually expressly subordinated in right of payment to the Notes and the applicable or such Guarantor’s Note Guarantee on substantially identical termsto the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Company or such Guarantor, as the case may be; provided, however, that no (1) unsecured Indebtedness will not be deemed or treated as subordinated or junior to secured Indebtedness merely because it is unsecured or is secured by different collateral or (2) Senior Debt will not be contractually deemed or treated as subordinated in right of payment or junior to any other Indebtedness of Senior Debt merely because it has a junior priority with respect to the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basissame collateral. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1619) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness permitted by this Section 4.09 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 4.09 permitting such Indebtedness. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, the payment of fees and premiums and additional payments with respect to Indebtedness, the realization of any Permitted Lien, a change in GAAP or an interpretation thereunder that results in an obligation of such Person that exists at such time becoming Indebtedness, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual of interest, accretion or amortization of original issue discount or payment of interest is included in Fixed Charges of the Company as accrued, accreted or paid, as the case may be. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness incurred pursuant to this Section 4.09, any other obligation of the obligor on such Indebtedness (or of any other Person that could have incurred such Indebtedness under this Section 4.09) arising under any Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness. The amount of any Indebtedness outstanding as of any date will be:
(1a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2b) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3c) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Ai) the Fair Market Value of such assets at the date of determination; andor
(Bii) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, in each case, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
"PERMITTED DEBT"): (1i) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xA) $20.0 550.0 million LESS the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay term Indebtedness under a Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction thereunder, in each case, in satisfaction of the covenant contained in Section 4.10 of this Indenture or (yB) 5030% of the Company's Consolidated Cash Flow for Net Tangible Assets as of the most recently ended four full fiscal quarters for which financial statements are publicly available;
date of such incurrence; (2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
; (3iii) the incurrence by the Company and the Guarantors its Restricted Subsidiaries of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued issued, in the case of the Notes, on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
; (4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness under Floor Plan Facilities; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4v), not to exceed $15.0 million;
30.0 million at any time outstanding; (5vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2ii), (3iii), (4), (5), (8), (9), (13), (14v) or (15vi) of this Section 4.09(b);
paragraph; (6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; providedPROVIDED, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or owing to a GuarantorRestricted Subsidiary, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
and (B) (1I) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2II) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, ; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vii);
; (7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
business and not for speculative purposes; (9ix) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued funds in the ordinary course of business, includingprovided, without limitationthat such Indebtedness is extinguished within five Business Days of its incurrence; (xi) Obligations in respect of performance, letters of credit to procure raw materials;
(14) the incurrence bid and surety bonds and completion guarantees provided by Foreign Subsidiaries of the Company or any of Indebtedness its Restricted Subsidiaries related to the construction of vehicle dealerships in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
business; and (15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstandingwhich, including when taken together with all Permitted Refinancing other Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence and incurred pursuant to this clause (16), xii) does not to exceed $35.0 20.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xii) above of the preceding paragraph, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to divide and classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of interestthe definition of Permitted Debt. Accrual of interest and dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification changes to amounts outstanding in respect of preferred stock Hedging Obligations solely as Indebtedness due to a change result of fluctuations in accounting principles, interest rates and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes purpose of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Crown Battleground LLC)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed (as of the date of incurrence of Indebtedness under this clause (1) and after giving pro forma effect to such incurrence and the application of net proceeds therefrom) the greater of (xA) $20.0 500.0 million or and (yB) 5025% of Consolidated Cash Flow for Total Assets as of the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing IndebtednessIndebtedness and Disqualified Stock existing on the date of this Indenture;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange (other than any Additional Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementGuarantees);
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease ObligationsObligations (other than Deemed Capitalized Leases), mortgage financings or financings, purchase money obligationsobligations or Disqualified Stock, in each case, incurred or issued for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amountamount or accreted liquidation preference, including all Permitted Refinancing Indebtedness incurred or issued to renew, refund, refinance, replace, defease or discharge any Indebtedness or Disqualified Stock incurred or issued pursuant to this clause (4(4), not to exceed the greater of $15.0 million100.0 million or 5.0% of Consolidated Total Assets at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness or the issuance by the Company of Disqualified Stock (including additional Disqualified Stock issued to pay premiums, retirement costs, accrued dividends and fees and expenses in connection therewith) in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease defease, discharge or discharge extend any Indebtedness or Disqualified Stock (other than intercompany IndebtednessIndebtedness or Disqualified Stock) that was permitted by this Indenture to be incurred under Section Section 4.09(a) hereof or clauses (2(2), (3), (4), (5), (312), (416), (5), (8), (9), (13), (1418) or (15(19) of this Section Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if if:
(1) the Company or any Guarantor is the obligor on such Indebtedness and Indebtedness; and
(2) the payee is not the Company or a Guarantor, then such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by incurred under this clause (6);
(7(6) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Firstcash, Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) a. The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, provided that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock), if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 3.00 to 11.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, and the proceeds thereof applied at the beginning of such four-quarter period.
(b) b. The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) . the incurrence by the Company and or any Guarantor Restricted Subsidiary of the Company of additional Indebtedness and letters of credit under the Senior Credit Facilities Facility in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown1) not to exceed the excess of (a) the greater of (x) $20.0 100.0 million or and (y) 50an amount equal to 35% of Consolidated the Borrowing Base as of the date of such incurrence over (b) the sum of (x) the aggregate amount of all repayments, optional or mandatory, of the principal of any term Indebtedness thereunder that have been made by the Company or any of its Restricted Subsidiaries since the Issue Date (I) as a result of the application of any Net Proceeds of Asset Sales pursuant to Section 4.10(b)(1)(a) hereof or (II) that was included in clause (E) in the calculation of Excess Cash Flow for in any fiscal year and (y) the most recently ended four full aggregate amount of all commitment reductions with respect to any revolving credit extensions thereunder that have been made by the Company or any of its Restricted Subsidiaries since the Issue Date (I) as a result of the application of any Net Proceeds of Asset Sales pursuant to Section 4.10(b)(1)(a) hereof or (II) that was included in clause (E) in the calculation of Excess Cash Flow in any fiscal quarters for which financial statements are publicly availableyear;
(2) . the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) . the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIssue Date;
(4) . the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred within 360 days of the acquisition or completion of construction or installation for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, or Attributable Debt relating to a sale leaseback transaction, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million7.5 million at any time outstanding;
(5) . the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (914), (13), 15) and (14) or (1518) of this Section 4.09(bparagraph (b);
(6) . the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) A. if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) . the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) A. any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) B. any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) 8. the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness and not for speculative purposes;
(9) . the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) . the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, health disability or other employee benefits or property, casualty or liability insurance or self-insurance obligations, bankers’ acceptances, completion guarantees (including related reimbursement obligations with respect to commercial letters of credit), performance, surety, appeal bankers’ acceptances and other similar performance and surety bonds in the ordinary course of business;
(11) . Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earn-out or other similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Restricted Subsidiary in accordance with the terms of this Indenture, other than Indebtedness or guarantees of Indebtedness incurred or assumed by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
12. the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) 13. endorsements of instruments or other items of deposit;
14. the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements owed to any current or former officer, director or employee of the Company or such any of its Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed Subsidiaries in connection with the repurchase, redemption or other acquisition or disposition retirement of Equity Interests held by any businesssuch current or former officer, assets director or Capital Stock employee of the Company or any of its Restricted Subsidiaries; provided that such repurchase, redemption or other acquisition or retirement is permitted by Section 4.07(b)(5) hereof;
15. Indebtedness of a Subsidiary, other than guarantees of Indebtedness Restricted Subsidiary incurred by any Person acquiring all and outstanding on or any portion of prior to the date on which such business, assets or a Restricted Subsidiary for the purpose of financing such acquisition;
(13) the incurrence was acquired by the Company or any Restricted Subsidiary or merged into the Company or a Restricted Subsidiary in accordance with the terms of this Indenture (other than Indebtedness incurred in contemplation of, or in connection with, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary of or was otherwise acquired by or merged into the Company or such Restricted Subsidiary); provided that after giving effect to such transaction, (a) the Company would have been able to incur at least $1.00 of additional Indebtedness pursuant to Section 4.09(a) hereof and (b) such Restricted Subsidiary is (i) a Domestic Restricted Subsidiary and becomes a Guarantor or (ii) is a Foreign Restricted Subsidiary and the aggregate principal amount of Indebtedness constituting reimbursement obligations at any time outstanding under this clause (15)(b)(ii), together with respect the aggregate principal amount of Indebtedness outstanding under clause (16) below, not to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materialsexceed $12.5 million;
(14) 16. the incurrence by Foreign Restricted Subsidiaries of the Company of Indebtedness in an aggregate principal amount at any time outstanding pursuant to this clause (16), together with the ordinary course aggregate principal amount outstanding pursuant to clause (15)(b)(ii) above, not to exceed the excess of business for working capital purposes (a) $15.0 million over (b) the sum of (x) the aggregate amount of all optional repayments of the principal of any term Indebtedness thereunder that have been made by the Company or any of its Restricted Subsidiaries since the Issue Date and (y) the aggregate amount of all commitment reductions with respect to any revolving credit extensions thereunder that have been made by the Company or any of its Restricted Subsidiaries since the Issue Date, in each case, that was included in clause (E) in the calculation of Excess Cash Flow in any fiscal year;
17. Indebtedness of the Company or any Guarantor in an aggregate principal amount not to exceed $5.0 million at any time outstanding;
(15) 25.0 million, the proceeds of which are used to directly or indirectly acquire Capital Stock of ▇▇▇▇▇▇ Steel Company, LLC, provided that after giving effect to the incurrence by of such Indebtedness and the application of the proceeds therefrom on such date, the ratio of (1) total Indebtedness of the Company or any and its Restricted Subsidiary Subsidiaries as of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that incurrence (determined on a consolidated basis in accordance with GAAP) to (2) Consolidated Cash Flow of the First Lien Leverage Ratio Company for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such Indebtedness is incurred would not exceed 3.00 to 1.00. Such ratio shall be calculated in a manner consistent with the definition of such incurrence, would have been no greater than 4.5 to 1.0, determined on a “Fixed Charge Coverage Ratio,” including any pro forma basis (including a pro forma application of the net proceeds therefrom), adjustments to Consolidated Cash Flow as if such incurrence had occurred at the beginning of such four-quarter periodset forth therein; and
(16) 18. the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1618), not to exceed $35.0 10.0 million. .
c. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. priority basis with respect to the same Collateral.
d. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1618) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09covenant. Indebtedness under the Senior Credit Facility outstanding on the Issue Date will be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. Any Indebtedness (other than Indebtedness under the Senior Credit Facility) outstanding as of the Issue Date, that was categorized at such time as having been incurred pursuant to one or more of the categories of "Permitted Debt” described in clauses (2) through (19) in the Existing Notes Indenture, will be deemed to have been incurred on the Issue Date in reliance on the corresponding category or categories of the Permitted Debt definition herein. The accrual of interestinterest or premium, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. .
e. The amount of any Indebtedness outstanding as of any date will be:
(1) . the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) . the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) . in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) A. the Fair Market Value of such assets at the date of determination; and
(B) B. the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Castle a M & Co)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company No Loan Party shall, nor shall not, and shall not it permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, indirectly create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall Borrower will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company Borrower may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s Borrower's most recently ended four full fiscal quarters for which the financial statements required to be delivered pursuant to Section 7.01 are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefromtherefrom and, in the case of Acquired Debt, giving pro forma effect to the applicable transaction related thereto), as if the additional Indebtedness had been incurred or the Disqualified Stock (and such transaction had occurred) or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period.
(bi) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and including letters of credit credit) under Credit Facilities the Asset-Based Facility or a Receivables Facility in an aggregate outstanding principal amount not to exceed $200,000,000, and (ii) Indebtedness under the Senior Notes issued on the Closing Date in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed $380,000,000 (and notes with identical terms as the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements Senior Notes that are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued registered pursuant to the Registration Rights Agreement;
registration rights agreement set forth in the Senior Note Indenture and issued in exchange for the Senior Notes); (4d) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used or usable in the business of the Company or any of its Restricted Subsidiariesa Permitted Business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4d), not to exceed $15.0 million;
10,000,000 at any time outstanding; (5e) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renewextend, refund, refinance, replacerenew, defease or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture Agreement to be incurred under the first paragraph of this Section 4.09(a) hereof 8.03 or clauses (2b), (3c)(i), (4d), (5), (8), (9), (13), (14e) or (15p) of this Section 4.09(b);
paragraph; (6f) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company Borrower and any of its Restricted Subsidiaries; provided, however, that:
that (Ai) if the Company or any Guarantor a Loan Party is the obligor on such Indebtedness and the payee is not the Company or a GuarantorLoan Party, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all the Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
and (Bii) (1A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Borrower or a Restricted Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company Borrower or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Borrower or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6f);
; (7g) the issuance by any of the Company’s Restricted Subsidiaries Subsidiary to the Company Borrower or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
that (Ai) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company Borrower or a Restricted Subsidiary of the Company; and
Subsidiary, and (Bii) any sale or other transfer of any such preferred stock to a Person that is not either the Company Borrower or a Restricted Subsidiary of the CompanySubsidiary, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7g);
; (8) the incurrence by the Company or any of its Restricted Subsidiaries of h) Hedging Obligations in the ordinary course of business;
business and not for speculative purposes; (9i) the guarantee by the Company or any of the Guarantors Loan Party of Indebtedness of the Company or a Restricted Subsidiary of the Company Consolidated Party that was permitted to be incurred by another provision of this Section 4.098.03; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the NotesObligations, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
; (10j) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ ' compensation claims, ; self-insurance obligations, ; bankers’ ' acceptances, completion guarantees (including related letters of credit), ; performance, suretyappeal, appeal completion, guarantee and other surety bonds; or similar bonds requirements in the ordinary course of business;
; (11k) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
business days; (12l) the incurrence by the Company Indebtedness of Foreign Subsidiaries in an aggregate principal amount at any time outstanding pursuant to this clause (l), including all Permitted Refinancing Indebtedness incurred to refund, refinance, defease, renew, extend or any Restricted Subsidiary of replace Indebtedness incurred pursuant to this clause (l), not to exceed $10,000,000; (m) Indebtedness arising from agreements of the Company Borrower or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiarysubsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary subsidiary for the purpose of financing such acquisition;
(13) ; provided that the incurrence maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company Borrower or any such Restricted Subsidiary in connection with such disposition; (n) Indebtedness consisting of Indebtedness constituting reimbursement take-or-pay obligations with respect to letters of credit issued contained in supply agreements entered into in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
; (14o) the incurrence by Foreign Subsidiaries Indebtedness of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not Borrower to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries incurred in connection with the purchase of accounts receivable and related assets by the Borrower from any such Subsidiary which assets are subsequently conveyed by the Borrower in connection with a Receivable Facility; and (p) additional Indebtedness of the Loan Parties in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renewextend, refund, refinance, replacerenew, defease or discharge replace any Indebtedness incurred pursuant to this clause (16p), and the issuance by the Borrower of any Disqualified Stock and by any Restricted Subsidiary of any additional preferred stock, not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis50,000,000. For purposes of determining compliance with this Section 4.098.03, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1a) through (16o) above of the preceding paragraph, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof8.03, the Company Borrower will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09covenant. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Borrower as accrued. Notwithstanding any other provision of this Section 4.09covenant, the maximum amount of Indebtedness that the Company Borrower or any Restricted Subsidiary may incur pursuant to this Section 4.09 covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue issue, and shall not permit any Guarantor to issue, any Disqualified Stock and shall not permit any of its Restricted Subsidiaries that are not Guarantors to issue any shares of preferred stock; provided, however, that the Company and any Guarantor may incur Indebtedness (including Acquired Debt) or and the Company and any Guarantor may issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, Stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof will this covenant shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):prohibit:
(1) the incurrence by the Company and or any Guarantor Restricted Subsidiary of additional Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $530.0 million, less the greater sum of all principal payments with respect to such Indebtedness pursuant to clause (xA) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableSection 4.10;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes (other than Additional Notes) and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued in exchange therefor pursuant to the Registration Rights Agreementregistration rights agreement;
(4A) Indebtedness incurred to finance the incurrence purchase, improvement or construction of property, plant or equipment (including through the purchase of all of the Capital Stock of a Person) so long as such Indebtedness is secured by a Lien on the property, plant or equipment so purchased, improved or constructed and such Indebtedness does not exceed the value of such property, plant or equipment so purchased or constructed or the value of such improvements and such Lien shall not extend to or cover other assets of the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for other than the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used so purchased, improved or constructed or the value of such improvements and the real property, if any, on which the property so constructed, improved or purchased, is situated and the accessions, attachments, replacements and improvements thereto or (B) Indebtedness incurred in connection with any lease financing transaction in conjunction with the business acquisition of new property or improvements to existing property; provided that such lease financing transaction is consummated within 90 days of such acquisition and the aggregate of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to clauses (A) and (B) does not exceed $15.0 million during any fiscal year (such amount is referred to as the "Maximum Amount"); provided that the Maximum Amount for each year shall be increased by the excess, if any, of (a) $30.0 million over (b) the amount of expenditures made in reliance on the provisions of this clause (4), not to exceed $15.0 million) for the immediately preceding two years;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness (other than intercompany Indebtedness) in exchange for, or the net proceeds of which are used to renewredeem, repurchase, retire, defease, or otherwise refund, refinance, replace, defease or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (155) of this Section 4.09(b)paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and Company, (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either neither the Company or nor a Restricted Subsidiary of the CompanyCompany or (iii) the designation of a Restricted Subsidiary that holds such Indebtedness as an Unrestricted Subsidiary, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessObligations;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company any Guarantor that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(109) obligations incurred in the incurrence ordinary course of business under (a) bankers acceptances or trade letters of credit which are to be repaid in full not more than one year after the date on which such Indebtedness is originally incurred to finance the purchase of goods by the Company or a Restricted Subsidiary of the Company; (b) standby letters of credit issued for the purpose of supporting (i) workers' compensation liabilities of the Company or any of its Restricted Subsidiaries as required by law, (ii) obligations with respect to leases of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiaries, or (iii) performance, payment, deposit or surety obligations of the Company or any of its Restricted Subsidiaries; (c) performance bonds and surety bonds, and refinancings thereof; and (d) guarantees of Indebtedness incurred in the ordinary course of business of suppliers, licensees, franchisees, or customers in an aggregate amount not to exceed $5.0 million at any time outstanding;
(10) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds in the ordinary course of business, so long as provided, however, that such Indebtedness is covered extinguished within five Business Daysbusiness days of the Company or its applicable Restricted Subsidiary being advised of such incurrence;
(11) Indebtedness under guarantees in respect of obligations of joint ventures of the Company or any of its Restricted Subsidiaries in aggregate principal amount not to exceed $20.0 million at any one time;
(12) Indebtedness incurred in connection with any sale and leaseback transaction; provided that the incurrence by aggregate of the Indebtedness incurred pursuant to this clause (12) shall not exceed $30.0 million at any time outstanding;
(13) Indebtedness to repurchase shares, or cancel options to purchase shares, of Equity Interests of the Company or any Restricted Subsidiary of the Company or any direct or indirect parent of the Company held by any then current or former director, officer or employee of, or consultant to, the Company or any of its Restricted Subsidiaries; provided that the aggregate of the Indebtedness incurred pursuant to this clause (13) shall not exceed $5.0 million in any fiscal year; provided that the amount available in any given fiscal year shall be increased by the excess, if any, of (i) $5.0 million over (ii) the amount used pursuant to this clause (13) in the immediately preceding two fiscal years;
(14) Indebtedness arising from agreements any agreement providing for indemnities, guarantees, purchase price adjustments, holdbacks, contingency payment obligations based on the performance of the Company acquired or such Restricted Subsidiary providing for indemnification, adjustment of purchase price disposed assets or similar obligation, in each case, obligations (other than guarantees of Indebtedness) incurred or assumed by any Person in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingassets;
(15) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Second Lien Acquired Debt for related to the sole purpose acquisition of repurchasing, redeeming or otherwise acquiring or retiring for value a Permitted Business if the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 incurrence of Acquired Debt (the "Relevant Fixed Charge Coverage Ratio") determined immediately after giving effect to 1.0, determined on a pro forma basis such incurrence and the related acquisition (including through a pro forma application merger, consolidation or otherwise) is higher than the Relevant Fixed Charge Coverage Ratio determined immediately before giving effect to such incurrence and the related acquisition;
(16) the issuance of any preferred stock by a Restricted Subsidiary of the net proceeds therefrom), as if such incurrence had occurred at Company to the beginning Company or to any other wholly-owned Restricted Subsidiary of such four-quarter periodthe Company; and
(1617) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness or the issuance of Disqualified Stock or preferred stock of Restricted Subsidiaries in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), outstanding not to exceed $35.0 25.0 million. The Company If any Non-Recourse Debt of an Unrestricted Subsidiary shall not incur, and shall not permit at any Guarantor time cease to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company constitute Non-Recourse Debt or such Guarantor unless Unrestricted Subsidiary shall be redesignated a Restricted Subsidiary, such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness event will be deemed to be contractually subordinated in right constitute an incurrence of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisRestricted Subsidiary. For purposes of determining compliance with this Section 4.09, :
(1) in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1617) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this covenant, the Company will be permitted to classify (or later classify or reclassify in whole or in part in its sole discretion) such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The covenant;
(2) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same same, or less onerous, terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock, the accrual of dividends on Disqualified Stock and the accretion of the liquidation preference of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09covenant; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other IndebtednessCompany; and
(3) in respect for the purposes of determining compliance with any dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of another Person secured by a Lien such Indebtedness incurred pursuant thereto shall be calculated based on the assets relevant currency exchange rate in effect on the earlier of the specified Person, the lesser of:
(A) the Fair Market Value of date that such assets at Indebtedness was incurred or the date of determination; and
(B) that the amount of the Indebtedness of the other PersonCompany or its applicable Restricted Subsidiary committed to incur such Indebtedness.
Appears in 1 contract
Sources: Indenture (K&f Industries Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xa) $20.0 45.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof, and (yb) 50% the Borrowing Base as of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and Issue Date, the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) 2.5% of Consolidated Total Assets and (y) $15.0 million10.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (155) of this paragraph Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its such Restricted SubsidiariesSubsidiary; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment of purchase price, “earn out” or similar obligations, in each case, incurred in connection with the acquisition or disposition of assets, including shares of Capital Stock, in accordance with the terms of this Indenture; provided, that the amount of such Indebtedness does not exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with any such disposition;
(10) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(1011) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptancesacceptances and performance, completion and surety bonds or guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(1112) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Daysbusiness days of being incurred;
(1213) the incurrence of Acquired Debt of Persons that are acquired by the Company or any Restricted Subsidiary in accordance with the terms of Indebtedness arising from agreements this Indenture; provided that such Acquired Debt is not incurred in connection with or in contemplation of such acquisition; and provided, further, that after giving effect to such acquisition, either (a) the Company or such Restricted Subsidiary providing for indemnificationwould be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a), adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13b) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available Fixed Charge Coverage Ratio immediately preceding the date of following such incurrence, acquisition and incurrence would have been no be greater than 4.5 the Company’s Fixed Charge Coverage Ratio immediately prior to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter periodacquisition and incurrence; and
(1614) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 7.5 million. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09; provided, that Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09; provided, in each such case, that the maximum amount of Indebtedness that any such accrual, accretion or payment is included in Fixed Charges of the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency valuesaccrued. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets or property at the date of determination; and
(B) the amount of the Indebtedness of the other PersonPerson that is secured by such assets. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies.
Appears in 1 contract
Sources: Indenture (Exopack Holding Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; provided that the aggregate principal amount of Indebtedness (including Acquired Debt) incurred or preferred stock that may be issued, as applicable, pursuant to the foregoing, together with any amounts incurred under clause (13) of the following paragraph, by Non-Guarantor Subsidiaries shall not exceed the greater of (x) $150.0 million and (y) 5.0% of Consolidated Total Assets.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 1,475.0 million less the aggregate amount of all (i) Secured Indebtedness incurred in reliance on clause (1) of Section 4.12 and (ii) Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay permanently any term Indebtedness under a Credit Facility or to repay permanently any revolving credit Indebtedness under a Credit Facility and effect a corresponding permanent commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% the maximum principal amount of Consolidated Cash Flow for Indebtedness that could be incurred such that after giving effect to such incurrence, the most recently ended four full fiscal quarters for which financial statements are publicly availableSecured Leverage Ratio of the Company would be no greater than 3.25 to 1.00 (calculated assuming all Indebtedness incurred under this clause (1) is secured and without netting the cash proceeds of any such Indebtedness);
(2) the incurrence by the Company and any of its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds, economic development loans and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an ; provided that the aggregate principal amountamount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (43), shall not to exceed the greater of (x) $15.0 million150.0 million and (y) 5.0% of Consolidated Total Assets;
(54) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1517) of this Section 4.09(b);
(65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (65);
(76) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (76);
(8) 7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness and entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by the Board of Directors or senior management of the Company;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(109) the incurrence Indebtedness incurred by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, including without limitation, limitation letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries in respect of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company workers’ compensation claims or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingself-insurance, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company with respect to reimbursement type obligations regarding workers’ compensation claims or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical termsself-insurance; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of either upon the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion drawing of such item letters of credit or the incurrence of such Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion such obligations are reimbursed within 30 days following such drawing or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discountself-insurance;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Patrick Industries Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries that is not a Guarantor to issue any shares of preferred stock; provided, however, that the Company and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), ) as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof will this covenant shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under the Credit Facilities Facility in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed an amount equal to $1.125 billion, including all Permitted Refinancing Indebtedness incurred pursuant to clause (5) of this paragraph to refund, refinance or replace any Indebtedness incurred pursuant to this clause (1), less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries to repay term Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Facility or to reduce commitments with respect to revolving credit borrowings under the Credit Facility pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Series A Notes, the Subsidiary Guarantees, the Series B Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementthereof;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any such Restricted Subsidiary, or in respect of its Restricted Subsidiariesa sale and leaseback transaction, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred pursuant to renew, clause (5) of this paragraph to refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million20.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that is either Existing Indebtedness or that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of by this Section 4.09(b)Indenture;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness, and such Indebtedness and the payee is held by a Restricted Subsidiary that is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeSubsidiary Guarantee of such Guarantor, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging (1) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or (2) exchange rate risk or raw materials price risk;
(9) 8) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if covenant;
(9) the Indebtedness being guaranteed is subordinated to or pari passu with shares of Class A Convertible Preferred Stock outstanding as of the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteeddate hereof;
(10) the incurrence by the Company or any of its Restricted the Company's Foreign Subsidiaries of Indebtedness in respect an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred pursuant to clause (5) of workers’ compensation claimsthis paragraph to refund, self-insurance obligations, bankers’ acceptances, completion guarantees refinance or replace any Indebtedness incurred pursuant to this clause (including related letters of credit10), performance, surety, appeal and other similar bonds in the ordinary course of businessnot to exceed $60.0 million at any time outstanding;
(11) the incurrence by the Company or any of its Restricted Subsidiaries a Securitization Entity of Indebtedness arising from the honoring by in a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness Qualified Securitization Transaction that is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations Non-Recourse Debt with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business and its other Restricted Subsidiaries (except for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefromStandard Securitization Undertakings), as if such incurrence had occurred at the beginning of such four-quarter period; and
(1612) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1612), not to exceed $35.0 40.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Scotts Company)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, and the proceeds thereof applied at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) (a) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown1)(a) not to exceed $85.0 million less the greater aggregate amount of (x) $20.0 million or (y) 50% all Net Proceeds of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence Asset Sales applied by the Company or any of its Restricted Subsidiaries of since the Issue Date to permanently repay any term Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this IndentureCredit Facility; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date amount of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled permitted to be incurred pursuant to Section 4.09(athe Credit Facilities in accordance with this clause (1)(a) hereof, the Company will shall be in addition to any Indebtedness permitted to classify such item of Indebtedness on be incurred pursuant to the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, Credit Facilities in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principlesreliance on, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09accordance with, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
clauses (14) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
and (215) the principal amount of the Indebtedness, in the case of any other Indebtednessbelow; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Stanadyne Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), Indebtedness) and that the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that (x) the Company may incur Indebtedness (including Acquired DebtIndebtedness) or issue shares of Disqualified Stock, Stock and the Guarantors (y) a Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockIndebtedness, in each case if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1.0 prior to and including December 31, 1998 and 2.25 to 1.0 after January 1, 1999, determined on a pro forma PRO FORMA basis (including a pro forma PRO FORMA application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.. The foregoing provisions will not apply to:
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor of Indebtedness under the Credit Agreement (and letters of credit under Credit Facilities guarantees thereof by the Guarantors) in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Subsidiaries thereunder) not to exceed $175.0 million less the greater aggregate amount of (x) $20.0 million or (y) 50% all Net Proceeds of Consolidated Cash Flow for Asset Sales applied to permanently reduce the most recently ended four full fiscal quarters for which financial statements are publicly availablecommitments with respect to such Indebtedness pursuant to Section 4.10 hereof;
(2ii) the incurrence by the Company of Indebtedness represented by the Notes, excluding any Additional Notes, and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementSubsidiary Guarantees;
(4iii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease ObligationsObligations (whether or not incurred pursuant to sale and leaseback transactions), mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiariessuch Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 million10.0 million at any time outstanding;
(5iv) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refundextend, refinance, renew, replace, defease or discharge any refund, Existing Indebtedness (other than intercompany Indebtedness) or Indebtedness that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2other than any such Indebtedness incurred pursuant to clause (i), (3iii), (4v), (5vi), (8), (9vii), (13viii), (14ix) or (15x) of this Section 4.09(bparagraph);
(6v) the incurrence by the Company or any of its Restricted Wholly Owned Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Wholly Owned Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
that (Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated subordinate to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Notes and (B) (1ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Wholly Owned Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Wholly Owned Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7vi) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to Indebtedness that is permitted by the terms of this Indenture to be incurred;
(vii) the incurrence by the Company of Hedging Obligations under currency exchange agreements; PROVIDED, that such agreements were entered into in the ordinary course of business;
(9viii) the guarantee incurrence of Indebtedness of a Guarantor represented by the Company or any of the Guarantors guarantees of Indebtedness of the Company or a Restricted Subsidiary of that has been incurred in accordance with the Company that was permitted to be incurred by another provision terms of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedIndenture;
(10ix) Indebtedness for letters of credit relating to workers' compensation claims and self-insurance or similar requirements in the ordinary course of business; and
(x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of addition to Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred permitted by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date other clause of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16paragraph) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), outstanding not to exceed $35.0 15.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Inex Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockPreferred Stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Preferred Stock or Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Preferred Stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions Notwithstanding the foregoing, clause (a) of this Section 4.09(a) hereof 4.09 will not prohibit the incurrence or issuance of any of the following items of Indebtedness or Preferred Stock (collectively, “Permitted Debt”):
(1) the incurrence by the Company and or any Guarantor Restricted Subsidiary of Indebtedness and (including letters of credit credit) under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry its Restricted Subsidiaries thereunder) outstanding under this clause as of such facility, not at the date of drawdownany such incurrence immediately after giving effect thereto, not to exceed an amount equal to (a) $1.2 billion less the Applied Proceeds Amount with respect to term Indebtedness plus (b) the greater of (x) $600.0 million less the Applied Proceeds Amount with respect to revolving credit Indebtedness or (y) the Domestic Borrowing Base;
(2) the incurrence by the Foreign Restricted Subsidiaries of Indebtedness (including letters of credit) under the Existing Foreign Credit Facility in an aggregate principal amount under this clause (2) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Foreign Restricted Subsidiaries thereunder) outstanding as of the date of any such incurrence immediately after giving effect thereto, not to exceed the greater of (x) $20.0 100.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing IndebtednessForeign Borrowing Base;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Initial Notes and the related Note Guarantees to be Notes issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued in exchange therefor pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation installation, commissioning or improvement or lease of property, plant or equipment (a) with respect to the ▇▇▇▇▇▇▇ Facility or (b) otherwise used in the business of the Company or any of its Restricted Subsidiaries, in each case in an aggregate principal amount, amount outstanding at any one time under this clause (4) (including all any Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease repurchase, defease, discharge or discharge otherwise acquire or retire any Indebtedness incurred pursuant to this clause (4)) as of the date of any such incurrence immediately after giving effect thereto, not to exceed (A) in the case of Section 4.09 (4)(a) $15.0 million60.0 million and (B) in the case of Section 4.09(4)(b), the greater of (x) $125.0 million or (y) 4% of the Company’s Total Assets;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations pursuant to which the Company or the Restricted Subsidiary has hedged against its actual exposure to fluctuations in interest rates, currency values or commodity prices;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of Existing Indebtedness;
(7) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease repurchase, defease, discharge or discharge any otherwise acquire or retire Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (56), (8), (97), (1316), (1418) or (1519) of this Section 4.09(b);
(6) 8) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness and Intercompany Bonds between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) except in the case of Intercompany Bonds, if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the NotesNote, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6)8);
(79) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence Guarantee by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant and, in the case of a Domestic Restricted Subsidiary, the provisions of Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed4.17;
(10) Indebtedness of the Company to the extent the net proceeds thereof are promptly (a) used to purchase the Notes tendered in a Change of Control Offer made as a result of a Change of Control in accordance with this Indenture, or (b) deposited to defease the Notes in accordance with Section 8.04 hereof;
(11) the issuance of Preferred Stock to the Company or a Wholly-Owned Restricted Subsidiary;
(12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, reclamation, statutory obligations, bankers’ acceptances, completion guarantees (including related performance, surety or similar bonds and letters of credit)credit or completion or performance guarantees or equipment leases, performance, surety, appeal and or other similar bonds obligations in the ordinary course of businessbusiness or consistent with past practice;
(1113) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1214) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment constituting obligations in respect of purchase price adjustments, Guarantees or similar obligation, in each case, incurred or assumed indemnities in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for in accordance with the purpose terms of financing such acquisitionthis Indenture;
(1315) accounts payable or other obligations of the Company or any of its Restricted Subsidiaries to trade creditors created or assumed by the Company or such Restricted Subsidiary in the ordinary course of business in connection with the obtaining of goods or services;
(16) Permitted Acquisition Indebtedness;
(17) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business; provided, including, without limitation, that upon the drawing of such letters of credit to procure raw materialsor the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(1518) the incurrence by the Company or of JBS Subordinated Indebtedness in an aggregate principal amount outstanding at any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingone time under this clause (18) (including any Permitted Refinancing Indebtedness incurred to renew, redeeming refund, refinance, replace, repurchase, defease, discharge or otherwise acquiring acquire or retiring for value the Subordinated Notes outstanding on retire any Indebtedness incurred pursuant to this clause (18)) as of the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if any such incurrence had occurred at the beginning of such four-quarter period; andimmediately after giving effect thereto, not to exceed $150.0 million;
(1619) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at outstanding under this clause (19) (including any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge renew, refund, refinance, replace, repurchase, defease, discharge or otherwise acquire or retire any Indebtedness incurred pursuant to this clause (1619)) as of the date of any such incurrence immediately after giving effect thereto, not to exceed the greater of (a) $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness 75.0 million or (including Permitted Debtb) that is contractually subordinated in right of payment to any other Indebtedness 2.5% of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisCompany’s Total Assets. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness Indebtedness, including Acquired Debt, Disqualified Stock or Preferred Stock, meets the criteria of more than one of the categories of Permitted Debt described in clauses clauses
(1) through (1619) above of this Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted to divide and classify such item of Indebtedness on the date of its incurrence, or later thereafter re-divide and reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant; provided, that (x) Indebtedness outstanding under the Existing U.S. Credit Facilities on the date of this Indenture will be deemed to have been incurred on such date in reliance on the exception provided in Section 4.09. 4.09(b)(1) and (y) Indebtedness outstanding under Existing Foreign Credit Facility on the date of this Indenture will be deemed to have been incurred on such date in reliance on the exception provided in Section 4.09(b)(2).
(c) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any ; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued.
(d) With respect to Indebtedness denominated in a currency other provision of this Section 4.09than United States dollars, the maximum amount of Indebtedness that the Company or any of its Restricted Subsidiary may incur pursuant to this Section 4.09 Subsidiaries shall not be have been deemed to be exceeded incur Indebtedness solely as a result of fluctuations in the exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personcurrencies.
Appears in 1 contract
Sources: Indenture (Pilgrims Pride Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, in each case, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
): (1i) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities Facilities, in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of of: (xA) $20.0 550.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay term Indebtedness under a Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction thereunder, in each case, in satisfaction of the covenant contained in Section 4.10 of this Indenture; and (yB) 5030% of the Company’s Consolidated Cash Flow for Net Tangible Assets as of the most recently ended four full fiscal quarters for which financial statements are publicly available;
date of such incurrence; (2ii) the incurrence by the Company and or any of its Restricted Subsidiaries of the Existing Indebtedness;
; (3iii) the incurrence by the Company and the Guarantors or any of its Restricted Subsidiaries of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued issued, in the case of the Notes, on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
Agreement (4and any exchange notes in respect of Additional Notes or other debt properly incurred under this Indenture, where the terms of such exchange notes are substantially identical to such other debt); (iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness under Floor Plan Facilities; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refund or discharge refinance any Indebtedness incurred pursuant to this clause (4v), not to exceed exceed, at any time outstanding, the greater of (x) $15.0 million;
50.0 million and (5y) 3.0% of Consolidated Total Assets of the Company; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2ii), (3iii), (4), (5), (8), (9), (13), (14) or (15vi) of this Section 4.09(b);
paragraph; (6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or owing to a GuarantorRestricted Subsidiary, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
and (B) (1I) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2II) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vii);
; (7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
business and not for speculative purposes; (9ix) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds in the ordinary course of business, so long as provided that such Indebtedness is covered extinguished within five Business Days;
Days of its incurrence; (12xi) the incurrence Obligations in respect of (A) performance, bid and surety bonds and completion guarantees provided by the Company or any of its Restricted Subsidiary Subsidiaries in the ordinary course of Indebtedness arising from business and (B) agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price price, earn-outs or similar obligation, in each case, obligations incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock subsidiary; (xii) Indebtedness arising in connection with endorsement of a Subsidiary, other than guarantees instruments for deposit in the ordinary course of business; (xiii) Indebtedness consisting of the financing of insurance premiums; (xiv) Indebtedness consisting of Guarantees incurred by any Person acquiring all in the ordinary course of business under repurchase agreements or any portion similar agreements in connection with the financing of such sales of goods in the ordinary course of business, assets or a Subsidiary for the purpose of financing such acquisition;
; (13xv) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes under Mortgage Loans in an amount incurred pursuant to this clause (xv) not to exceed $5.0 200.0 million at any time outstanding;
; and (15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16xvi) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstandingwhich, including when taken together with all Permitted Refinancing other Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence and incurred pursuant to this clause (16), xvi) does not to exceed the greater of (x) $35.0 million. The Company shall not incur, 125.0 million and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debty) that is contractually subordinated in right 6.0% of payment to any other Indebtedness Consolidated Total Assets of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisCompany. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xvi) above or is of the preceding paragraph, and may also be entitled to be incurred in whole or in part pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to divide and classify such item of Indebtedness on the date of its incurrence, or incurrence and later divide and reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual Indebtedness that is outstanding on the date of interestthis Indenture under Credit Facilities will be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Debt and unless repaid may not be reclassified. Accrual of interest and dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, changes to amounts outstanding in respect of Hedging Obligations solely as a result of fluctuations in interest rates, the reclassification assumption or guarantee of preferred stock as Indebtedness due to of a change in accounting principles, Restricted Subsidiary by the Company or another Restricted Subsidiary and the payment of dividends on Disqualified Stock or preferred stock of Restricted Subsidiaries in the form of additional shares of the same class of Disqualified Stock or preferred stock of Restricted Subsidiaries will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock of Restricted Subsidiaries for purposes purpose of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, in each case, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
): (1i) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xA) $20.0 550.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay term Indebtedness under a Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction thereunder, in each case, in satisfaction of the covenant contained in Section 4.10 of this Indenture or (yB) 5030% of the Company’s Consolidated Cash Flow for Net Tangible Assets as of the most recently ended four full fiscal quarters for which financial statements are publicly available;
date of such incurrence; (2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
; (3iii) the incurrence by the Company and the Guarantors its Restricted Subsidiaries of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued issued, in the case of the Notes, on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
; (4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness under Floor Plan Facilities; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4v), not to exceed $15.0 million;
30.0 million at any time outstanding; (5vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2ii), (3iii), (4), (5), (8), (9), (13), (14v) or (15vi) of this Section 4.09(b);
paragraph; (6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or owing to a GuarantorRestricted Subsidiary, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
and (B) (1I) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2II) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, ; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vii);
; (7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
business and not for speculative purposes; (9ix) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued funds in the ordinary course of business, includingprovided that such Indebtedness is extinguished within five Business Days of its incurrence; (xi) Obligations in respect of performance, without limitation, letters of credit to procure raw materials;
(14) the incurrence bid and surety bonds and completion guarantees provided by Foreign Subsidiaries of the Company or any of Indebtedness its Restricted Subsidiaries in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
business; and (15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstandingwhich, including when taken together with all Permitted Refinancing other Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence and incurred pursuant to this clause (16), xii) does not to exceed $35.0 20.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xii) above of the preceding paragraph, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to divide and classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of interestthe definition of Permitted Debt. Accrual of interest and dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification changes to amounts outstanding in respect of preferred stock Hedging Obligations solely as Indebtedness due to a change result of fluctuations in accounting principles, interest rates and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes purpose of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockDisqualified Stock and any Foreign Subsidiary may incur Indebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of Disqualified Stock, as set forth below (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown4.09(b)(i) not to exceed $1,000.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for any Restricted Subsidiary to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Agreement and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, pursuant to Section 4.10;
(2ii) the incurrence by the Company and its any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture hereof and the Exchange Notes and the related Note any Guarantees to be issued pursuant to the Registration Rights Agreementthereof by any Guarantor;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (44.09(b)(iv), not to exceed the greater of (i) $15.0 million100.0 million and (ii) 5.0% of Consolidated Tangible Assets, at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2ii), (3iii), (4v), (5), (8), (9), (13), (14) or (15xi) of this Section 4.09(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiary; provided, however, that:
(A1) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B2) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Subsidiary; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (64.09(b)(vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or for hedging foreign currency exchange risk, in each case to the extent the Hedging Obligations are incurred in the ordinary course of businessthe Company’s financial management and not for any speculative purpose;
(9viii) the guarantee Guarantee by the Company or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision ; provided, in each such case, that the amount thereof is included in Fixed Charges of this Section 4.09, the maximum amount of Indebtedness that Company as accrued;
(x) the incurrence by the Company or any Restricted Subsidiary may incur of Indebtedness, including Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, incurred in respect of workers’ compensation claims, self-insurance obligations, performance, proposal, completion, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; provided that the underlying obligation to perform is that of the Company or its Restricted Subsidiaries and not that of the Company’s Unrestricted Subsidiaries; provided further that such underlying obligation is not in respect of borrowed money;
(xi) the incurrence by the Company or any Restricted Subsidiary of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this Section 4.09 shall clause (xi), not be deemed to be exceeded solely as exceed $125.0 million;
(xii) the incurrence by the Company or any Restricted Subsidiary of Indebtedness, including but not limited to Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, arising from agreements of the Company or a result Restricted Subsidiary providing for indemnification, adjustment of fluctuations purchase price or similar obligations, in exchange rates each case, incurred or currency values. The amount assumed in connection with the disposition of any business, assets or Equity Interests of the Company or a Restricted Subsidiary, other than guarantees of Indebtedness outstanding as incurred by any Person acquiring all or any portion of any date will be:such business, assets or Equity Interests for the purpose of financing such acquisition;
(1xiii) the accreted value incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from the Indebtednesshonoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of any daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness issued with original issue discount;is extinguished within five Business Days of incurrence; or
(2xiv) the issuance of preferred stock of a Restricted Subsidiary to the Company that is pledged to secure the Credit Agreement, provided that any subsequent transfer that results in such preferred stock being held by a Person other than the Company or a Restricted Subsidiary will be deemed to constitute an issuance of preferred stock not permitted by this clause (xiv).
(c) For purposes of determining compliance with any restriction on the incurrence of Indebtedness where the Indebtedness incurred is not denominated in U.S. dollars, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of incurrence of such Indebtedness; provided, however, that if any such Indebtedness not denominated in U.S. dollars is subject to a Hedging Obligation with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Hedging Obligation. The principal amount of any Permitted Refinancing Indebtedness incurred in the same currency as the Indebtedness being refinanced will be the U.S. Dollar Equivalent of the Indebtedness refinanced, except to the extent that (i) such U.S. Dollar Equivalent was determined based on a Hedging Obligation, in which case the Permitted Refinancing Indebtedness will be determined in accordance with the preceding sentence, and (ii) the principal amount of the Indebtedness, in Permitted Refinancing Indebtedness exceeds the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the principal amount of the Indebtedness being refinanced, in which case the U.S. Dollar Equivalent of such excess will be determined on the date such Permitted Refinancing Indebtedness is Incurred.
(d) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xiv) of Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a), the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided in Section 4.09(b)(i).
(e) The Company shall not, and shall not permit any Guarantor to, incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other PersonIndebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes or such Note Guarantee on substantially identical terms; provided, however, that no Indebtedness of the Company or any Guarantor will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or any Guarantor solely by virtue of being unsecured or by virtue of the fact that the holders of secured Indebtedness have entered into intercreditor arrangements giving one or more of such holders priority over the other holders in the collateral held by them.
Appears in 1 contract
Sources: Exhibit
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdownthereof) not to exceed the greater of (xa) $20.0 1,250.0 million or (yb) 50% such amount as would not, as of the date of incurrence and after giving pro forma effect thereto, cause the Consolidated Cash Flow Net Secured Leverage Ratio to exceed 3.50 to 1.00; provided that, for purposes of determining the most recently ended four full fiscal quarters for which financial statements are publicly availableamount of Indebtedness that may be incurred under this clause (1)(b), all Indebtedness incurred under this clause (1) shall be treated as secured Indebtedness;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the any Exchange Notes and the related Note Guarantees to thereof that may be issued pursuant to as required by the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed exceed, as of any date of incurrence, the greater of (a) $15.0 million200.0 million or (b) 5.0% of Total Assets;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (914), (1315), (1419) or (1521) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1a) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and Company; and
(2b) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and other similar surety bonds in the ordinary course of business;
(11) reimbursement obligations in respect of standby or documentary letters of credit or bankers’ acceptances in the ordinary course of business in an aggregate principal amount at any time outstanding not to exceed $30.0 million;
(12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1213) the incurrence by a Securitization Subsidiary of Indebtedness in connection with a Qualified Securitization Facility that is without recourse to the Company or to any other Subsidiary of the Company or their assets (other than such Securitization Subsidiary and its assets and, as to the Company or any Subsidiary of the Company, other than pursuant to representations, warranties, covenants and indemnities customary for such transactions) and is not guaranteed by any such Person in an aggregate principal amount not to exceed, as of any date of incurrence, the greater of (a) 85% of the gross book value of the accounts receivable of the Company and its Restricted Subsidiaries determined based on the most recently available month-end consolidated balance sheet information for the Company or (b) $250.0 million;
(14) the incurrence by the Company or any of its Restricted Subsidiaries of (a) Indebtedness of a Person incurred and outstanding on or prior to the date on which such Person was acquired by the Company or any of its Restricted Subsidiaries or merged into the Company or a Restricted Subsidiary in accordance with the terms of this Indenture or (b) Indebtedness of the Company or any of its Restricted Subsidiaries incurred to acquire any Person who will become a Restricted Subsidiary or be merged into the Company or any of its Restricted Subsidiaries in accordance with the terms of this Indenture; provided, however, that, in either case, on the date of such incurrence, (i) the Company would have been able to incur $1.00 of additional Indebtedness pursuant to Section 4.09(a) after giving effect to the incurrence of such Indebtedness pursuant to this clause (14) or (ii) the Fixed Charge Coverage Ratio for the Company would be greater than such Fixed Charge Coverage Ratio immediately prior to such incurrence of Indebtedness;
(15) the incurrence by the Company of Indebtedness, to the extent the net proceeds thereof are (a) used to purchase Notes in connection with a Change of Control Offer or pursuant to Section 3.07 or (b) promptly deposited to defease or satisfy and discharge the Notes as described under Article 8 or Article 11;
(16) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness incurred in the ordinary course of business in connection with cash pooling arrangements, cash management and other Indebtedness incurred in the ordinary course of business in respect of netting services, overdraft protections and similar arrangements in each case in connection with cash management and deposit accounts;
(17) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Company or such a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price price, earn-out or other similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(1318) the incurrence by the Company or any of its Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in connection with the ordinary course repurchase, redemption or other acquisition or retirement of business for working capital purposes in an amount not to exceed $5.0 million at Equity Interests held by any time outstanding;
(15) the incurrence by current or former officer, director or employee of the Company or any of its Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this IndentureSubsidiaries; provided that such repurchase, redemption or other acquisition or retirement is permitted by Section 4.07; and provided, further that such Indebtedness must be expressly subordinated to the First Lien Leverage Ratio for prior payment in full in cash of all Obligations then due with respect to the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding Notes and the Note Guarantees;
(19) Indebtedness of Foreign Subsidiaries in an aggregate amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (19), not to exceed, as of any date of such incurrence, would have been no the greater than 4.5 to 1.0of (a) $150.0 million (or the equivalent thereof, determined on a pro forma basis measured at the time of each incurrence, in the applicable foreign currency) or (including a pro forma application b) 4.0% of Total Assets;
(20) Indebtedness consisting of guarantees of Indebtedness or other obligations of joint ventures permitted under clause (15) of the net proceeds therefrom), as if such incurrence had occurred at the beginning definition of such four-quarter period; “Permitted Investments;” and
(1621) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1621), not to exceed exceed, as of any date of incurrence, the greater of (a) $35.0 million. 200.0 million or (b) 5.0% of Total Assets.
(c) The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien priority basis. .
(d) For purposes of determining compliance with this Section 4.09, : (i) in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1621) above of Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted permitted, in its sole discretion, to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.094.09 and will only be required to include the amount and type of such Indebtedness in one of the sub-clauses of Section 4.09(b) or under Section 4.09(a); and (ii) at the time of incurrence, the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in Section 4.09(a) or 4.09(b). Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred under Section 4.09(b)(1). The accrual of interestinterest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Teleflex Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur issue Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.;
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 60.0 million or (y) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million10% of the Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1512) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s 's Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; providedPROVIDED, howeverHOWEVER, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided PROVIDED that if the Indebtedness being guaranteed is subordinated to or pari passu equal in right of payment with the Notes, then the Guarantee guarantee shall be subordinated or pari passuequal in right of payment, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ ' compensation claims, self-insurance obligations, bankers’ ' acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and performance or surety bonds or other similar bonds reimbursement obligations in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(1612) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1612), not to exceed $35.0 30.0 million. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; providedPROVIDED, howeverHOWEVER, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1612) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09, including by allocation to more than one other type of Indebtedness. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; PROVIDED, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall will not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Riverside Forest Products Marketing LTD)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed (as of the date of incurrence of Indebtedness under this clause (1) and after giving pro forma effect to such incurrence and the application of net proceeds therefrom) the greater of (xA) $20.0 750.0 million or and (yB) 5025% of Consolidated Cash Flow for Total Assets as of the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing IndebtednessIndebtedness and Disqualified Stock existing on the date of this Indenture;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange (other than any Additional Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementGuarantees);
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease ObligationsObligations (other than Deemed Capitalized Leases), mortgage financings or financings, purchase money obligationsobligations or Disqualified Stock, in each case, incurred or issued for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amountamount or accreted liquidation preference, including all Permitted Refinancing Indebtedness incurred or issued to renew, refund, refinance, replace, defease or discharge any Indebtedness or Disqualified Stock incurred or issued pursuant to this clause (4(4), not to exceed the greater of $15.0 million175.0 million or 7.50% of Consolidated Total Assets at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness or the issuance by the Company of Disqualified Stock (including additional Disqualified Stock issued to pay premiums, retirement costs, accrued dividends and fees and expenses in connection therewith) in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease defease, discharge or discharge extend any Indebtedness or Disqualified Stock (other than intercompany IndebtednessIndebtedness or Disqualified Stock) that was permitted by this Indenture to be incurred under Section Section 4.09(a) hereof or clauses (2(2), (3), (4), (5), (312), (416), (518), (8), (9), (13), (14(19) or (1524) of this Section Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if if:
(1) the Company or any Guarantor is the obligor on such Indebtedness and Indebtedness; and
(2) the payee is not the Company or a Guarantor, then such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by incurred under this clause (6);
(7(6) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Firstcash, Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockDisqualified Stock and any Foreign Subsidiary may incur Indebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of Disqualified Stock, as set forth below (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown4.09(b)(i) not to exceed $525.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for any Restricted Subsidiary to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Agreement and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, pursuant to Section 4.10;
(2ii) the incurrence by the Company and its any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture hereof and the Exchange Notes and the related Note any Guarantees to be issued pursuant to the Registration Rights Agreementthereof by any Guarantor;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (44.09(b)(iv), not to exceed the greater of (i) $15.0 million20.0 million and (ii) 5.0% of Consolidated Tangible Assets, at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2ii), (3iii), (4v), (5), (8), (9), (13), (14) or (15xi) of this Section 4.09(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiary; provided, however, that:
(A1) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B2) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Subsidiary; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (64.09(b)(vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or for hedging foreign currency exchange risk, in each case to the extent the Hedging Obligations are incurred in the ordinary course of businessthe Company’s financial management and not for any speculative purpose;
(9viii) the guarantee Guarantee by the Company or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision ; provided, in each such case, that the amount thereof is included in Fixed Charges of this Section 4.09, the maximum amount of Indebtedness that Company as accrued;
(x) the incurrence by the Company or any Restricted Subsidiary may incur of Indebtedness, including Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, incurred in respect of workers’ compensation claims, self-insurance obligations, performance, proposal, completion, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; provided that the underlying obligation to perform is that of the Company or its Restricted Subsidiaries and not that of the Company’s Unrestricted Subsidiaries; provided further that such underlying obligation is not in respect of borrowed money;
(xi) the incurrence by the Company or any Restricted Subsidiary of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this Section 4.09 shall clause (xi), not be deemed to be exceeded solely as exceed $50.0 million;
(xii) the incurrence by the Company or any Restricted Subsidiary of Indebtedness, including but not limited to Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, arising from agreements of the Company or a result Restricted Subsidiary providing for indemnification, adjustment of fluctuations purchase price or similar obligations, in exchange rates each case, incurred or currency values. The amount assumed in connection with the disposition of any business, assets or Equity Interests of the Company or a Restricted Subsidiary, other than guarantees of Indebtedness outstanding as incurred by any Person acquiring all or any portion of any date will be:such business, assets or Equity Interests for the purpose of financing such acquisition;
(1xiii) the accreted value incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from the Indebtednesshonoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of any daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness issued with original issue discount;is extinguished within five Business Days of incurrence; or
(2xiv) the principal amount issuance of preferred stock of a Restricted Subsidiary to the IndebtednessCompany that is pledged to secure the Credit Agreement, provided that any subsequent transfer that results in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured such preferred stock being held by a Lien on Person other than the assets Company or a Restricted Subsidiary will be deemed to constitute an issuance of the specified Person, the lesser of:
preferred stock not permitted by this clause (A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personxiv).
Appears in 1 contract
Sources: Indenture (Geo Group Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockDisqualified Stock and any Foreign Subsidiary may incur Indebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a10.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness or the issuance of Disqualified Stock, as set forth below (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown1) not to exceed $1,600.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for any Restricted Subsidiary to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Agreement and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, pursuant to Section 10.10;
(2) the incurrence by the Company and its any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note any Guarantees to be issued pursuant to the Registration Rights Agreementthereof by any Guarantor;
(4) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (i) $15.0 million100.0 million and (ii) 5.0% of Consolidated Tangible Assets, at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a10.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (155) of this Section 4.09(b10.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiary; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and and
(2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Subsidiary; shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or for hedging foreign currency exchange risk, in each case to the extent the Hedging Obligations are incurred in the ordinary course of businessthe Company’s financial management and not for any speculative purpose;
(9) 8) the guarantee by the Company or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if 10.09;
(9) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness being guaranteed is subordinated to or pari passu in the form of additional Indebtedness with the Notessame terms, then and the Guarantee shall be subordinated or pari passu, as applicable, to payment of dividends on Disqualified Stock in the form of additional shares of the same extent class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 10.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as the Indebtedness guaranteedaccrued;
(10) the incurrence by the Company or any Restricted Subsidiary of its Indebtedness, including Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiaries of Indebtedness Subsidiary, incurred in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptancesperformance, proposal, completion, surety and similar bonds and completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds provided by the Company or any Restricted Subsidiary in the ordinary course of business; provided, that the underlying obligation to perform is that of the Company or its Restricted Subsidiaries and not that of the Company’s Unrestricted Subsidiaries; provided further, that such underlying obligation is not in respect of borrowed money;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1611), not to exceed $35.0 125.0 million;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness, including but not limited to Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Equity Interests of the Company or a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Equity Interests for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within five business days of incurrence;
(14) the issuance of preferred stock of a Restricted Subsidiary to the Company that is pledged to secure the Credit Agreement, provided that any subsequent transfer that results in such preferred stock being held by a Person other than the Company or a Restricted Subsidiary shall be deemed to constitute an issuance of preferred stock not permitted by this clause (14);
(15) the incurrence of Acquired Debt (but not any Indebtedness incurred in connection with, or in contemplation of such other Person merging with or into, or becoming a Subsidiary of, the Company); provided, however, that on the date such Person becomes a Subsidiary or is acquired by the Company and after giving pro forma effect thereto, (x) the Company would have been entitled to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio in Section 10.09(a) or (y) the Fixed Charge Coverage Ratio would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and
(16) Guarantees by the Company or any Restricted Subsidiary of Indebtedness of any Unrestricted Subsidiary, provided that the aggregate principal amount of such Guarantees of Indebtedness of any Unrestricted Subsidiary shall not exceed $75.0 million at any time outstanding.
(c) For purposes of determining compliance with any restriction on the incurrence of Indebtedness where the Indebtedness incurred is not denominated in U.S. dollars, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of incurrence of such Indebtedness; provided, however, that if any such Indebtedness not denominated in U.S. dollars is subject to a Hedging Obligation with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Hedging Obligation. The principal amount of any Permitted Refinancing Indebtedness incurred in the same currency as the Indebtedness being refinanced will be the U.S. Dollar Equivalent of the Indebtedness refinanced, except to the extent that (i) such U.S. Dollar Equivalent was determined based on a Hedging Obligation, in which case the Permitted Refinancing Indebtedness shall be determined in accordance with the preceding sentence, and (ii) the principal amount of the Permitted Refinancing Indebtedness exceeds the principal amount of the Indebtedness being refinanced, in which case the U.S. Dollar Equivalent of such excess shall be determined on the date such Permitted Refinancing Indebtedness is incurred.
(d) For purposes of determining compliance with this Section 10.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) of Section 10.09(b) above, or is entitled to be incurred pursuant to Section 10.09(a), the Company shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 10.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt.
(e) The Company shall not incurnot, and shall not permit any Guarantor to incurto, incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable or such Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will of the Company or any Guarantor shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or any Guarantor solely by virtue of being unsecured or by virtue of being the fact that the holders of secured on a first Indebtedness have entered into intercreditor arrangements giving one or junior Lien basis. For purposes more of determining compliance with this Section 4.09, such holders priority over the other holders in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured collateral held by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personthem.
Appears in 1 contract
Sources: Exhibit (Geo Group Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Following the Closing Date, the Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stockstock (other than to the Company or another Restricted Subsidiary); provided, however, that the Company and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, issued at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”):");
(1i) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under the Credit Facilities Facility; in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (xa) $20.0 100.0 million at any time outstanding, less the aggregate amount of all Net Proceeds of Asset Sales applied to repay any such Indebtedness pursuant to clause (a) of the second paragraph of Section 4.10 or (yb) the sum of 80% of the accounts receivable plus 50% of Consolidated Cash Flow for the inventory, in each case of the Company and its Restricted Subsidiaries, net of reserves, as shown on the most recently ended four full fiscal quarters for which financial statements are publicly availablerecent balance sheet of the Company and its Restricted Subsidiaries ;
(2ii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the Note Guarantees;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5iv) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof by the first paragraph, or by clauses (2), ii) through (3), (4), (5), (8), (9), (13), (14viii) or (15) of the second paragraph of this Section 4.09(b)4.09;
(6v) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries; provided, however, that:
that (Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Notes and (B) (1b) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company Subsidiary, and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary of the CompanySubsidiary, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7vi) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be are incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company fixing or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations hedging interest rate risk with respect to letters any floating rate Indebtedness that is permitted by the terms of credit issued in the ordinary course of business, including, without limitation, letters of credit this Indenture to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time be outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16vii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit 15.0 million at any Guarantor to incur, any Indebtedness time; and
(including Permitted Debtviii) that is contractually subordinated in right of payment to any other Indebtedness of the guarantee by the Company or such Guarantor unless such any of the Guarantors of Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed was permitted to be contractually subordinated in right incurred by another provision of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisthis Section 4.09. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16viii) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.094.09 and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. The accrual Accrual of interest, the accretion or amortization of original issue discount, accreted value and the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Holmes Products Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries that is not a Guarantor to issue any shares of preferred stock; provided, however, that the Company and any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), ) as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; provided further, that the amount of Indebtedness (including Acquired Debt), Disqualified Stock or preferred stock that may be incurred or issued, as applicable, by Restricted Subsidiaries that are not Guarantors, pursuant to this Section 4.09(a), shall not exceed $250.0 million at any one time outstanding.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal an amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $2.75 billion, less the greater sum of (xi) the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries to repay Indebtedness under Credit Facilities pursuant to Section 4.10 and (ii) the amount of Indebtedness in excess of $20.0 200.0 million or incurred pursuant to clause (y10) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablebelow;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and (excluding any Additional Notes), the related Note Subsidiary Guarantees to be issued on of all Notes, the date of this Indenture and the Exchange 2023 Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreementof all 2023 Notes;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment assets used in the business of the Company or any such Restricted Subsidiary, or in respect of its Restricted Subsidiariesa Sale and Leaseback Transaction, in an aggregate principal amount, including and all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million125.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses clause (2), (3), (4), (5), (8), (9), (13), (14) or (153) of above or this clause (5) or pursuant to Section 4.09(b4.09(a);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among owed to the Company and or any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness, and such Indebtedness and the payee is held by a Restricted Subsidiary that is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeSubsidiary Guarantee of such Guarantor, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any Indebtedness under Hedging Obligations entered into for bona fide hedging purposes of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Company; and
(B) any sale or other transfer of any Indebtedness to which such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7)Hedging Obligations relate;
(8) the incurrence guarantee by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant and could have been incurred (in compliance with this covenant) by the Person so guaranteeing such Indebtedness;
(9) the incurrence by any of the Company’s Foreign Subsidiaries of Indebtedness in an aggregate principal amount, including all Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (9), not to exceed (x) $125.0 million at any time outstanding plus (y) $100.0 million at any time outstanding; provided that if the any Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee under this subclause (y) shall be subordinated supported by a letter of credit incurred under one or pari passu, as applicable, more Credit Facilities pursuant to the same extent as the Indebtedness guaranteedclause (1) of this Section 4.09(b);
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businesspursuant to a Receivables Financing;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient fundsfunds in the ordinary course of business; provided, so long as however, that such Indebtedness is covered extinguished within five Business DaysDays of incurrence;
(12) the incurrence by Indebtedness of the Company or any of its Restricted Subsidiary Subsidiaries in respect of Indebtedness arising from agreements security for workers’ compensation claims, payment obligations in connection with self-insurance, performance bonds, surety bonds or similar requirements in the ordinary course of the Company or such Restricted Subsidiary providing for business;
(13) indemnification, adjustment of purchase price price, earn-out or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, business or assets of the Company or Capital Stock any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary Equity Interests for the purpose of financing or in contemplation of any such acquisition;
; provided that (13a) any amount of such obligations included on the incurrence by face of the balance sheet of the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued shall not be permitted under this clause (13) and (b) in the ordinary course case of businessa disposition, including, without limitation, letters the maximum aggregate liability in respect of credit to procure raw materials;
all such obligations outstanding under this clause (1413) shall at no time exceed the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence gross proceeds actually received by the Company or any and the Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of Subsidiaries in connection with such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter perioddisposition; and
(1614) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 250.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness .
(including Permitted Debtc) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this covenant, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, incurrence (or later reclassify all such Indebtedness in whole or a portion of such item of Indebtedness, in part) in any manner that complies with this Section 4.09covenant. The In addition, the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be treated as an incurrence of Indebtedness; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding the foregoing, any Indebtedness or an issuance of Disqualified Stock for purposes outstanding pursuant to the Credit Agreement on the date of this Section 4.09. Indenture will be deemed to have been incurred pursuant to clause (1) of the definition of “Permitted Debt.”
(d) Notwithstanding any other provision of this Section 4.09the foregoing, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur be incurred pursuant to this Section 4.09 covenant shall not be deemed to be exceeded with respect to any outstanding Indebtedness due solely as a to the result of fluctuations in the exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personcurrencies.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor the Guarantors of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownGuarantors thereunder) not to exceed (as of any date of incurrence of Indebtedness under the provision described in this clause (1) and after giving pro forma effect to such incurrence and the application of the net proceeds therefrom) the greater of (xa) $20.0 75.0 million or and (yb) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Initial Notes and the related Note Guarantees in respect of the Initial Notes to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in each case incurred no later than 365 days after the date of such acquisition or the date of completion of such construction, installation or improvement, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 millionmillion at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (155) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee Guarantee by the Company or any of the Guarantors a Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness Indebtedness:
(A) in respect of workers’ compensation claims, self-insurance obligationsperformance bonds, bankers’ acceptancesacceptances and surety or appeal bonds provided by the Company or any of its Restricted Subsidiaries to their customers in the ordinary course of their business,
(B) in respect of performance bonds or similar obligations of the Company or any of its Restricted Subsidiaries for or in connection with pledges, completion guarantees deposits or payments made or given in the ordinary course of business in connection with or to secure statutory, regulatory or similar obligations, including obligations under health, safety or environmental obligations, and
(including related letters C) arising from Guarantees to suppliers, lessors, licensees, contractors, franchisees or customers of credit), performance, surety, appeal and obligations (other similar bonds than Indebtedness) incurred in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in each case incurred in connection with the disposition of any business, assets or Restricted Subsidiary of the Company (other than Guarantees of Indebtedness or other obligations incurred by any Person acquiring all or any portion of such business assets or Restricted Subsidiary of the Company for the purpose of financing such acquisition) in a principal amount not to exceed the gross proceeds actually received by the Company or any of its Restricted Subsidiaries in connection with such disposition;
(12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds in the ordinary course of business, so long as provided that such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, extinguished promptly in each case, incurred or assumed in connection accordance with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisitioncustomary practices;
(13) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness constituting reimbursement obligations arising from agreements with respect governmental agencies of any foreign country, or political subdivision or agency thereof, relating to letters the construction of credit issued plants and the purchase and installation (including related training costs) of equipment to be used in a Permitted Business; provided that such Indebtedness (a) has a Stated Maturity in excess of the final maturity of the Notes plus 91 days and (b) in the ordinary course aggregate does not exceed $25.0 million since the date of business, including, without limitation, letters of credit to procure raw materialsthis Indenture;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingSenior Subordinated Notes;
(15) the incurrence by the Company’s Foreign Subsidiaries of Foreign Subsidiary Debt in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (15), not to exceed the greater of (a) $80.0 million or (b) 1.50% of the Total Assets of the Company’s Foreign Subsidiaries as of any date of incurrence of Indebtedness pursuant to this clause (15);
(16) the incurrence of Indebtedness of Persons that are acquired by the Company or any of its Restricted Subsidiary Subsidiaries or merged with or into the Company or any of Second Lien Debt for its Restricted Subsidiaries in accordance with the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date terms of this Indenture; provided that (a) such Indebtedness is not incurred in contemplation of such acquisition or merger and (b) the First Lien Leverage Company would have a Fixed Charge Coverage Ratio for immediately after giving pro forma effect to such acquisition or merger (and such incurrence) equal to or greater than the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available Fixed Charge Coverage Ratio of the Company immediately preceding the date of such acquisition or merger (and such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis );
(including a pro forma application 17) the incurrence by the Company or any its Restricted Subsidiaries of Banking Product Obligations in the net proceeds therefrom), as if such incurrence had occurred at the beginning ordinary course of such four-quarter periodbusiness; and
(1618) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1618), not to exceed $35.0 75.0 million. The .
(c) Notwithstanding any other provision of this Section 4.09:
(1) in no event will the Company shall permit its Restricted Subsidiaries that are not Guarantors to incur Indebtedness or issue preferred stock pursuant to Section 4.09(a) of this Indenture or pursuant to clause (15) of Section 4.09(b) of this Indenture having an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of such Restricted Subsidiaries thereunder and preferred stock being deemed to have a principal amount equal to the liquidation preference thereof) together with all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred by such non-Guarantor pursuant to Section 4.09(a) of this Indenture or pursuant to clause (15) of Section 4.09(b) of this Indenture, in excess of $100.0 million; and
(2) the Company will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1618) above of Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness or any portion thereof on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of Section 4.09(b). The accrual of interestinterest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. For purposes of determining compliance with any U.S. dollar denominated restriction on the incurrence of Indebtedness, the U.S. dollar equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; , and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Viasystems Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including any Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any of the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock), if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.00 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions Paragraph (a) of this Section 4.09(a) hereof 4.09 will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1i) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under one or more Credit Facilities in an and Guarantees thereof by the Subsidiary Guarantors; provided that the aggregate principal amount at any one time outstanding under of all Indebtedness of the Company and the Subsidiary Guarantors incurred pursuant to this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and the Subsidiary Guarantors thereunder) does not exceed an amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not equal to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available200.0 million;
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes hereof (and the related Note Guarantees Exchange Notes to be issued pursuant to the Registration Rights Agreement) and the incurrence by the Subsidiary Guarantors of the Subsidiary Guarantees of the Notes (and the related Exchange Notes);
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries the Subsidiary Guarantors of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the Company's business or the business of the Company or any of its Restricted Subsidiariessuch Subsidiary Guarantor, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4iv), not to exceed $15.0 million5.0% of Consolidated Tangible Assets at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under clause (a) of this Section 4.09(a) hereof 4.09 or clauses (2ii), (3), (4), (5), (8), (9), (13), (14iii) or (15x) of this Section 4.09(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among owed to the Company and or any of its Restricted Subsidiariesthe Subsidiary Guarantors; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and;
(B) if a Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of such Subsidiary Guarantor's Subsidiary Guarantee; and
(1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company Guarantor and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Guarantor shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted SubsidiarySubsidiary Guarantor, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary normal course of businessbusiness for the purpose of fixing or hedging currency, commodity or interest rate risk (including with respect to any floating rate Indebtedness that is permitted by the terms hereof to be outstanding in connection with the conduct of the Company's respective businesses and not for speculative purposes);
(9viii) the guarantee by the Company or any of the Subsidiary Guarantors of Indebtedness of the Company or a of one of its Restricted Subsidiary of the Company Subsidiaries that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(10ix) the incurrence by the Company or any of its Restricted Company's Unrestricted Subsidiaries of Non-recourse Debt; provided, however, that if any such Indebtedness in respect ceases to be Non-recourse Debt of workers’ compensation claimsan Unrestricted Subsidiary, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the such event shall be deemed to be an incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred that was not permitted by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
this clause (13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefromix), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16x) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16x), not to exceed $35.0 million. The Company shall not incurmillion (which amount may be incurred, and shall not permit in whole or in part, under any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical termsCredit Facilities); provided, however, provided that no more than $15.0 million of such additional Indebtedness will shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely incurred by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. Restricted Subsidiaries that are not Subsidiary Guarantors.
(c) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16x) above of Section 4.09(b) as of the date of incurrence thereof or is entitled to be incurred pursuant to clause (a) of this Section 4.09(a) hereof4.09, the Company will be permitted to shall, in its sole discretion, at the time the proposed Indebtedness is incurred, (x) classify such all or a portion of that item of Indebtedness on the date of its incurrenceincurrence under either the clause (a) of this Section 4.09 or under any category of Permitted Debt, or (y) reclassify at a later reclassify date all or a portion of such that or any other item of Indebtedness, Indebtedness as being or having been incurred in any manner that complies with this Section 4.09. The accrual 4.09 and (z) elect to comply with this Section 4.09 and the applicable definitions in any order.
(d) For purposes of interestdetermining compliance with any dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the accretion dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was incurred.
(e) The Company shall not incur, create, issue, assume, guarantee or amortization of original issue discount, the payment of interest on otherwise become liable for any Indebtedness that is subordinate or junior in the form right of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due payment to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares any Senior Debt of the same class Company and senior in any respect in right of Disqualified Stock payment to the Notes; provided, however, that no Indebtedness of the Company will not be deemed to be an incurrence contractually subordinated in right of Indebtedness payment solely by virtue of being unsecured. No Subsidiary Guarantor will incur, create, issue, assume, guarantee or an issuance of Disqualified Stock otherwise become liable for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that is subordinate or junior in right of payment to the Company or Senior Debt of such Subsidiary Guarantor and senior in any Restricted respect in right of payment to such Subsidiary may incur pursuant to this Section 4.09 shall not Guarantor's Subsidiary Guarantee; provided, however, that no Indebtedness of a Subsidiary Guarantor will be deemed to be exceeded contractually subordinated in right of payment solely as a result by virtue of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:being unsecured.
(1f) Indebtedness shall be deemed to have been incurred by the accreted value survivor of a merger, at the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value time of such assets merger and, with respect to an acquired Subsidiary, at the date time of determination; and
(B) the amount of the Indebtedness of the other Personsuch acquisition.
Appears in 1 contract
Sources: Indenture (Villa Pines Care LLC)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of the following items of Disqualified Stock or preferred stock, as applicable (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $420.0 million less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries since the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of the Existing Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of (a) the Existing IndebtednessIndebtedness and (b) the Subordinated Intercompany Promissory Note;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Existing Notes and the related Note Guarantees to be issued on the date of this the Existing Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementrelated registration rights agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of $15.0 million5.0 million and 1.5% of Total Assets at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (22)(a), (3), (4), (5), (8), (914), (1315), (1416) or (1517) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessnot entered into for speculation;
(9) the guarantee or co-issuance by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company to the extent that the guaranteed or co-issued Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed or co-issued is subordinated to or pari passu in right of payment with the Notes, then the Guarantee shall or co-issuance must be subordinated or pari passu, as applicable, in right of payment to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of letters of credit, bank guarantees, workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit)guarantees, performance, surety, appeal and other statutory, appeal, completion, export or import, indemnities, customs, revenue bonds or similar bonds instruments in the ordinary course of business, including guarantees or obligations with respect thereto (in each case other than for an obligation for money borrowed); provided, however that upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business DaysDays or incurrence;
(12) the incurrence by the Company of Contribution Indebtedness;
(13) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each caseobligations, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock Restricted Subsidiary of a Subsidiary, the Company (other than guarantees Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Restricted Subsidiary for the purpose of financing such acquisition;
(13) ), so long as the incurrence principal amount of such Indebtedness does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations the Company in connection with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materialssuch transactions;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence incurred by the Company or any of its Restricted Subsidiaries to finance the purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company, including Parent and ▇▇▇▇▇▇▇ Companies, to the extent described in Section 4.07(b)(5) hereof;
(15) Indebtedness of a Subsidiary outstanding on the date such Subsidiary was acquired by the Company or a Restricted Subsidiary of the Company (other than Indebtedness incurred in contemplation of, or in connection with, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary of or was otherwise acquired by the Company or a Restricted Subsidiary of the Company); provided that, on the date that such Subsidiary is acquired by the Company or a Restricted Subsidiary of the Company and after giving effect to the incurrence of such Indebtedness and the acquisition of such Subsidiary pursuant to this clause (15), either (a) the Company would have been able to incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant or (b) the Company’s Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition;
(16) the incurrence by one or more Foreign Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16)) and then outstanding, not to exceed the greater of $35.0 million20.0 million and 3% of Total Assets; and
(17) the incurrence by the Company of additional Indebtedness or Disqualified stock, or by one or more Restricted Subsidiaries of additional Indebtedness or preferred stock, in an aggregate principal amount (or accreted value or liquidation amount, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (17) and then outstanding, not to exceed the greater of $20.0 million and 3% of Total Assets. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first junior priority basis or pursuant to any customary provisions of any inter-creditor agreements related to the lien subordination (but not the payment subordination) of any such junior Lien basissecurity interest. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1617) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify and reclassify, in each case in its sole discretion, such item of Indebtedness and may divide, classify and reclassify (based on circumstances in existence at the time of such reclassification or redivision) such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness under Credit Facilities outstanding on the date on which Existing Notes were first issued and authenticated under the Existing Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of its incurrence, or later reclassify all or a portion the definition of such item of Indebtedness, in any manner that complies with this Section 4.09Permitted Debt. The accrual of interestinterest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, principles and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Restricted Subsidiary of the Guarantors Company may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.00 to 11.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred or issued, as applicable, under this subsection (a) by Restricted Subsidiaries that are not Guarantors shall not exceed at any time outstanding the greater of (x) $75.0 million and (y) 5.0% of Total Assets as of the date of such incurrence.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiaries of additional Indebtedness and letters of credit under the ABL Credit Facilities Facility in an aggregate principal amount (excluding the amount of any Hedging Obligations and banking service, treasury management and other similar Obligations) at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of of: (x) $20.0 500.0 million or and (y) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of Indebtedness outstanding on the Existing Indebtednessdate of this Indenture (other than Indebtedness under the ABL Credit Agreement);
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment Equipment used in the business of the Company or any of its Restricted Subsidiaries, in an provided that the aggregate principal amountamount of any such incurrence does not cause the aggregate principal amount of Indebtedness then outstanding under this clause (4), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) $15.0 million110.0 million and (y) 7.5% of Total Assets as of the date of any such incurrence;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1519) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the such Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, suretycompletion and surety bonds and completion, appeal performance and other similar bonds guarantees in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of banking service, treasury management and other similar Obligations (including Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds or in respect of netting services, overdraft protection and otherwise in connection with deposit accounts, so long as such Indebtedness is covered within five Business Days);
(12) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate principal amount at any time outstanding pursuant to this clause (12), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (12), not to exceed the greater of (x) $75.0 million (or the equivalent thereof, measured at the time of each incurrence, in applicable foreign currency) and (y) 5.0% of Total Assets as of the date of any such incurrence;
(13) the incurrence of Indebtedness arising from any agreement entered into by the Company or any of its Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price adjustment or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, business or assets of the Company or any of its Restricted Subsidiaries or Capital Stock of a Subsidiary, other than guarantees any of its Restricted Subsidiaries; provided that the maximum aggregate liability in respect of all such Indebtedness incurred pursuant to this clause (13) shall at no time exceed the gross proceeds actually received by any Person acquiring all the Company and its Restricted Subsidiaries in connection with such acquisitions or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisitiondispositions;
(1314) the incurrence of Permitted Acquisition Debt;
(15) the incurrence of Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(16) the incurrence of Indebtedness consisting of take-or-pay obligations contained in supply agreements relating to products, services or commodities of a type that the Company or any of its Subsidiaries uses or sells in the ordinary course of business;
(17) the incurrence of Indebtedness consisting of the financing of insurance premiums;
(18) the incurrence of Indebtedness consisting of Guarantees incurred in the ordinary course of business under repurchase agreements or similar agreements in connection with the financing of sales of goods in the ordinary course of business; and
(19) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1619), not to exceed the greater of (x) $35.0 million110.0 million and (y) 7.5% of Total Assets as of the date of any such incurrence. The Company shall not incurwill not, and shall the Company will not permit any Guarantor to incurto, directly or indirectly, incur any Indebtedness (including Permitted Acquired Debt) that is contractually subordinated or junior in right of payment to any other Indebtedness of the Company or such Guarantor Guarantor, as the case may be, unless such Indebtedness is also contractually expressly subordinated in right of payment to the Notes and the applicable or such Guarantor’s Note Guarantee on substantially identical termsto the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Company or such Guarantor, as the case may be; provided, however, that no (1) unsecured Indebtedness will not be deemed or treated as subordinated or junior to secured Indebtedness merely because it is unsecured or is secured by different collateral or (2) Senior Debt will not be contractually deemed or treated as subordinated in right of payment or junior to any other Indebtedness of Senior Debt merely because it has a junior priority with respect to the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basissame collateral. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1619) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09, provided that any Indebtedness incurred pursuant to clause (19) of Section 4.09(b) shall cease to be deemed incurred or outstanding for purposes of such clause but shall be deemed incurred for purposes of the first paragraph of this covenant from and after the first date on which the Company or any Restricted Subsidiary could have incurred such Indebtedness under Section 4.09(a) hereof without reliance on such clause. Indebtedness permitted by this Section 4.09 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 4.09 permitting such Indebtedness. Indebtedness under the ABL Credit Facility outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt and may not be reclassified. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, the payment of fees and premiums and additional payments with respect to Indebtedness, the realization of any Permitted Lien, a change in GAAP or an interpretation thereunder that results in an obligation of such Person that exists at such time becoming Indebtedness, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual of interest, accretion or amortization of original issue discount or payment of interest is included in Fixed Charges of the Company as accrued, accreted or paid, as the case may be. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness incurred pursuant to this Section 4.09, any other obligation of the obligor on such Indebtedness (or of any other Person that could have incurred such Indebtedness under this Section 4.09) arising under any Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness. The amount of any Indebtedness outstanding as of any date will be:
(1a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2b) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3c) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Ai) the Fair Market Value of such assets at the date of determination; andor
(Bii) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, that if no Default or Event of Default has occurred and is continuing at the time of or as a consequence of the incurrence of such Indebtedness, the Company and any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a4.08(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”Indebtedness"):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding, less the amount of any such Indebtedness retired with the Net Proceeds from any Asset Sale applied to permanently reduce the outstanding under this amounts or commitments referred to in clause (1)(with letters 4) of credit being deemed to have a Section 4.11(b);
(2) the incurrence by the Company and any Wholly Owned Restricted Subsidiary of Indebtedness represented by Purchase Money Obligations and Capital Lease Obligations in an aggregate principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facilityaccreted value, not at the date of drawdown) as applicable, not to exceed the greater of (x) $20.0 million or 5,000,000 and (y) 5015% of Consolidated Cash Flow EBITDA of the Company and its Restricted Subsidiaries for the most recently ended four full fiscal quarters for which internal financial statements are publicly availableavailable immediately preceding the date on which such Indebtedness is incurred;
(23) the incurrence by the Company and its Restricted Subsidiaries of the (a) Existing Indebtedness and (b) Acquired Pending Acquisitions Indebtedness;
(34) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by $125,000,000 aggregate principal amount of the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture Issue Date and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a4.08(a) hereof or clauses (2), (3), (4), (5), (8), (910), (13), (14) or (1512) of this Section 4.09(bsubsection (b);
(6) the incurrence by the Company or any of its Wholly Owned Restricted Subsidiaries of intercompany Indebtedness solely between or among the Company and any of its Wholly Owned Restricted SubsidiariesSubsidiary; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Subsidiary Guarantor; and
(B) (1b) any subsequent issuance or transfer of Equity Interests Capital Stock that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary of the Companythereof, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Wholly Owned Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding; provided that the notional principal amount of each such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates;
(9) 8) the guarantee Guarantee by the Company or any of the Guarantors Restricted Subsidiaries of Indebtedness (other than Non-Recourse Indebtedness of an Unrestricted Subsidiary) of the Company or a Restricted Subsidiary of the Company Guarantor that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedSection;
(109) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will Stock; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued;
(10) the incurrence by the Company or any of its Wholly Owned Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (10), not to exceed $5,000,000 at any one time outstanding, provided that the amount of Indebtedness incurred pursuant to this clause (10) by Non-Guarantor Restricted Subsidiaries shall not exceed $1,000,000 in the aggregate for all such Non-Guarantor Restricted Subsidiaries at any one time outstanding;
(11) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Indebtedness; provided, however, that if any such Indebtedness ceases to be Non-Recourse Indebtedness of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (11); and
(12) the incurrence by the Company and the Subsidiary Guarantors of (A) Indebtedness represented by up to $23,000,000 in aggregate principal amount of Notes (the "New Notes") in addition to those Notes referred to in clause (4) above, which New Notes shall constitute Additional Notes under this Indenture, and the related Subsidiary Guarantees, in each case issued at any time and from time to time prior to March 31, 2005, provided, however, that the Company shall use the net proceeds from the offering of such New Notes to pay the amounts owing under the Purchase Agreement and the payment of other expenses related to the transactions contemplated by the Purchase Agreement and the offering and issuance of such New Notes, and (B) the Notes and related subsidiary guarantees issued in the offer that may be made by the Company pursuant to the Registration Rights Agreement, dated as of the issue date of the New Notes, by and among the Company, the Subsidiary Guarantors and the purchasers of the New Notes, to exchange the New Notes for exchange Notes (the "New Exchange Notes"), which New Exchange Notes shall constitute Additional Notes under this Indenture.
(c) The Company shall not incur any Indebtedness (including Permitted Indebtedness) that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Notes on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured.
(d) For purposes of determining compliance with this Section 4.08, in the event that an incurrence item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (11) above in section (b), or an issuance of Disqualified Stock for purposes is entitled to be incurred pursuant to subsection (a) of this Section 4.09. Notwithstanding any other provision of this Section 4.094.08, the maximum amount Company shall be permitted to classify such item of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; andits incurrence, in any manner that complies with this Section.
(Be) Notwithstanding anything in this Indenture to the amount contrary, neither the Company nor any of its Restricted Subsidiaries shall enter into, incur any Indebtedness under or otherwise become obligated under any Credit Agreement unless prior to or concurrently therewith the Indebtedness Trustee and the agents and lenders under such Credit Agreement shall have entered into the Senior Intercreditor Agreement and the Company shall have delivered to the Trustee such Officers' Certificates and Opinions of Counsel in connection therewith as the other PersonTrustee shall reasonably require."
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockDisqualified Stock and any Foreign Subsidiary may incur Indebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of Disqualified Stock, as set forth below (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown4.09(b)(i) not to exceed $525.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for any Restricted Subsidiary to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Agreement and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, pursuant to Section 4.10;
(2ii) the incurrence by the Company and its any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture hereof and the Exchange Notes and the related Note any Guarantees to be issued pursuant to the Registration Rights Agreementthereof by any Guarantor;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (44.09(b)(iv), not to exceed the greater of (i) $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; 20.0 million and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stockstock (including Disqualified Stock) other than to the Company; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stock), if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of So long as no Default shall have occurred or be continuing or would be caused thereby, Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and or any Guarantor Restricted Subsidiary of additional Indebtedness and letters of credit under one or more Credit Facilities in an Facilities; provided that the aggregate principal amount at of all Indebtedness and letters of credit of the Company and any one time outstanding under Restricted Subsidiaries incurred pursuant to this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or potential liability of the Company and any Restricted Subsidiaries thereunder) does not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 800.0 million or and (y) 5020.0% of Consolidated Cash Flow for Total Assets (less the most recently ended four full fiscal quarters for which financial statements are publicly availableaggregate principal amount of Indebtedness incurred by Securitization Subsidiaries and then outstanding pursuant to clause (13));
(2) the incurrence by the Company and its any of the Restricted Subsidiaries of the Existing IndebtednessIndebtedness after giving effect to the use of proceeds of the Notes;
(3) the incurrence by the Company and the Guarantors any of its Restricted Subsidiaries of Indebtedness represented by the Notes and the related Note Guarantees to be Initial Notes, issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIssue Date;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) $15.0 million100.0 million and (y) 2.5% of Consolidated Total Assets at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, defease, renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), or this clause (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any subsequent sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any Indebtedness arising from agreements of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries providing for indemnification, adjustment of shares of preferred stock; providedpurchase price, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale earn out or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemedsimilar Obligations, in each case, to constitute an issuance incurred or assumed in connection with the acquisition or disposition of any business, assets or shares of Capital Stock of a Restricted Subsidiary, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such preferred stock by such business, assets or shares of Capital Stock of a Restricted Subsidiary that was not permitted by this clause (7)for the purpose of financing such acquisition;
(8) the incurrence of Indebtedness of the Company or any of its Restricted Subsidiaries represented by (a) letters of credit for the account of the Company or any of its Restricted Subsidiaries or (b) other obligations to reimburse third parties pursuant to any surety bond, performance bond or other similar arrangements, which letters of credit or other obligations, as the case may be, are intended to provide security for provider claims, workers’ compensation claims, payment obligations in connection with sales tax and insurance or other similar requirements in the ordinary course of business;
(9) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations; provided that such Hedging Obligations are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of businessbusiness and are entered into for bona fide hedging purposes (and not for speculative purposes) of the Company or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Company);
(910) the guarantee Guarantee by the Company or any of the Guarantors Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is incurred by the Company and is subordinated to or pari passu with the Notes, then the Guarantee of such Indebtedness by any of its Restricted Subsidiaries shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(1011) Indebtedness incurred by a Foreign Restricted Subsidiary which, when aggregated with the principal amount of all other Indebtedness incurred pursuant to this clause (11) and then outstanding, does not exceed the greater of (x) $150.0 million or (y) 3.25% of the Company’s Consolidated Total Assets;
(12) Acquired Debt or other Indebtedness, which in the case of other Indebtedness, is incurred reasonably contemporaneously to finance an acquisition, merger, consolidation or amalgamation, provided that after giving effect thereto, (a) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test in Section 4.09(a), or (b) the Fixed Charge Coverage Ratio for the four full fiscal quarters immediately preceding such incurrence for which internal financial statements are available would be no worse than immediately prior thereto;
(13) Indebtedness incurred by a Securitization Subsidiary in connection with a Qualified Securitization Transaction that is not recourse with respect to the Company and its Restricted Subsidiaries; provided, however, that in the event such Securitization Subsidiary ceases to qualify as a Securitization Subsidiary or such Indebtedness becomes recourse to the Company or any of its Restricted Subsidiaries Subsidiaries, such Indebtedness will, in each case, be deemed to be, and must be classified by the Company as, incurred at such time (or at the time initially incurred) under one more of Indebtedness in respect the other provisions of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businessthis Section 4.09;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1214) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements to the extent the proceeds thereof are used to purchase Notes pursuant to a Change of the Company Control Offer or such Restricted Subsidiary providing for indemnification, adjustment of purchase price to defease or similar obligation, discharge Notes in each case, incurred or assumed in connection accordance with the acquisition or disposition terms of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingthis Indenture;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for Indebtedness consisting of (a) the sole purpose financing of repurchasinginsurance premiums or (b) take or pay obligations in supply agreements, redeeming in each case in the ordinary course of business;
(16) Real Estate Indebtedness, not to exceed in the aggregate at any one time outstanding the greater of (x) $250.0 million or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date (y) 5.0% of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; andConsolidated Total Assets;
(1617) Indebtedness in respect of secured or unsecured letters of credit incurred by the Company or any Restricted Subsidiary in an aggregate principal amount not to exceed $200.0 million;
(18) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to extend, defease, renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1618), not to exceed the greater of (x) $35.0 million. The Company shall not incur, 225.0 million and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debty) that is contractually subordinated in right 5.0% of payment to any other Consolidated Total Assets;
(19) Indebtedness of the Company or such Guarantor unless any Restricted Subsidiary arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds, provided that such Indebtedness is also contractually subordinated in right satisfied within five business days of payment to the Notes and the applicable Note Guarantee on substantially identical termsincurrence; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other and
(20) Indebtedness of the Company solely by virtue or any Restricted Subsidiary in respect of being unsecured cash management services entered into in the ordinary course of business and Guarantees of the Obligations of the Company or by virtue any Restricted Subsidiary in respect of being secured on a first or junior Lien basis. such indebtedness.
(c) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1620) above of Section 4.09(b) or is entitled to be incurred pursuant to Section 4.09(a) hereof), in each case, as of the date of incurrence thereof, the Company will be permitted to shall, in its sole discretion, classify (or later reclassify in whole or in part), or divide (or later redivide in whole or in part) such item of Indebtedness on the date of its incurrence, (or later reclassify all or a any portion of such item of Indebtedness, thereof) in any manner that complies with this Section 4.094.09 and such Indebtedness will be treated as having been incurred pursuant to such clauses or Section 4.09(a) hereof, as the case may be, designated by the Company. Indebtedness under Credit Facilities outstanding on the date on which the Notes are first issued and authenticated under this Indenture will at all times be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interestinterest or dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock Equity Interests as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09covenant, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
shall be (1) the accreted value of the Indebtednessthereof, in the case of any Indebtedness issued with original issue discount;
, (2) the principal amount of the Indebtednessthereof, in the case of any other Indebtedness; and
, (3) in respect the case of the Guarantee by the specified Person of any indebtedness of any other Person, the maximum liability to which the specified Person may be subject upon the occurrence of the contingency giving rise to the obligation and (4) in the case of Indebtedness of another Person secured others guaranteed by means of a Lien on the assets any asset of the specified Person, the lesser of:
of (A) the Fair Market Value of such assets at asset on the date of determination; and
on which Indebtedness is required to be determined pursuant to this Indenture and (B) the amount of the Indebtedness so secured.
(d) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness which by its terms (or by the terms of any agreement governing such Indebtedness) is subordinated to any other Indebtedness of the Company or such Restricted Subsidiary, as the case may be, unless made expressly subordinate to the Notes to the same extent and in the same manner as such Indebtedness is subordinated pursuant to subordination provisions that are most favorable to the holders of any other PersonIndebtedness of the Company or such Restricted Subsidiary, as the case may be.
Appears in 1 contract
Sources: Indenture (Centene Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company Holdings shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), and the Company Holdings shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of preferred stock; provided, however, that the Company Holdings may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio of Holdings for the Company’s its most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Notwithstanding Section 4.09(a) hereof will not prohibit 4.10(a), the incurrence of any of the following items of Indebtedness shall be permitted (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1) the incurrence by the Company Issuer and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal an amount equal to the maximum face amount thereunder whether or not drawn potential liability of Holdings and revolving credit facilities measured at entry of such facility, not at the date of drawdownRestricted Subsidiaries thereunder) not to exceed the greater of (a) the sum of (x) $20.0 US$165.0 million or and (y) 50% Can$180.0 million (including the Canadian Dollar Equivalent of any amount under this clause (y) denominated in U.S. dollars) less the aggregate amount of all Net Proceeds of Asset Sales applied by Holdings or any Restricted Subsidiary since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.13 and (b) the amount that is 2.5 times Consolidated Cash Flow of Holdings for the its most recently ended four full fiscal quarters for which internal financial statements are publicly available;
(2) the incurrence by Holdings and the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture Issue Date, the Guarantees and the Exchange Notes and the related Note Guarantees Securities to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company Holdings or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used or useful in the business of the Company Holdings or any of its Restricted SubsidiariesSubsidiary, and refinancings thereof, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 millionUS$10.0 million at any time outstanding;
(5) the incurrence by the Company Holdings or any of its Restricted Subsidiaries Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any discharge, Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2Sections 4.10(a), (3b)(2), (4), (5), (8), (9), (13), (14b)(3) or (15) of this Section 4.09(bb)(5);
(6) the incurrence by the Company Holdings or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and Holdings and/or any of its Restricted SubsidiariesSubsidiary; provided, however, that:
(Aa) if the Company Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Company Issuer or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the CompanyIssuer, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Holdings or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or neither Holdings nor a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Holdings or such Restricted Subsidiary, as the case may be, that was is not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company Holdings or to any of its Restricted Subsidiaries of shares Subsidiary of preferred stock; provided, however, that:
that (Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company Holdings or a Restricted Subsidiary of the Company; and
and (Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or neither Holdings nor a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was is not permitted by this clause (7);
(8) the incurrence by the Company Holdings or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company Issuer or any of the Guarantors Guarantor of Indebtedness of the Company Holdings or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.094.10; provided that if the Indebtedness being guaranteed is subordinated to the Notes or pari passu with the NotesGuarantees, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company Holdings or any of its Restricted Subsidiaries Subsidiary of Indebtedness in respect of workers’ ' compensation claims, self-insurance obligations, indemnities, bankers’ ' acceptances, completion guarantees (including related letters of credit), performance, suretycompletion and surety bonds or guarantees, appeal and other similar bonds types of obligations in the ordinary course of business;
(11) the incurrence by the Company Holdings or any of its Restricted Subsidiaries Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Daysbusiness days;
(12) the incurrence by the Company Holdings or any Restricted Subsidiary of Indebtedness arising from agreements consisting of the Company guarantees, earn-outs, indemnities or such Restricted Subsidiary providing for indemnification, adjustment obligations in respect of purchase price or similar obligation, in each case, incurred or assumed adjustments in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of businessassets, including, without limitation, letters shares of credit Capital Stock; provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (12) shall at no time exceed (a) in the case of an acquisition, US$10.0 million (provided that the amount of such liability shall be deemed to procure raw materialsbe the amount thereof, if any, reflected on the consolidated balance sheet of Holdings (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by Holdings and the Restricted Subsidiaries in connection with such disposition;
(13) Daylight Loans incurred by Holdings from time to time;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course respect of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;Permitted Factoring Arrangements; and
(15) the incurrence by the Company Holdings or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1615), not to exceed $35.0 US$25.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness .
(including Permitted Debtc) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.094.10, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1615) above of Section 4.10(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof4.10(a), the Company will be Issuer is permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.094.10. Indebtedness under Credit Facilities outstanding on the Issue Date shall initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of Section 4.10(b).
(d) The accrual of interest, the accrual of dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.094.10; provided, in each such case, that the amount thereof is included in Fixed Charges of Holdings as accrued. Notwithstanding any other provision of this Section 4.094.10, the maximum amount of Indebtedness that the Company Holdings or any Restricted Subsidiary may incur pursuant to this Section 4.09 4.10 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. .
(e) The amount of any Indebtedness outstanding as of any date will shall be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonPerson that is secured by such assets.
Appears in 1 contract
Sources: Indenture (MAAX Holding Co.)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Company's Restricted Subsidiaries that are Guarantors or Foreign Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 225.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof or (y) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (159) of this Section 4.09(b);
(65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, ; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (65);
(76) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in with respect to any Indebtedness that is permitted by the ordinary course terms of businessthis Indenture to be outstanding;
(97) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) 8) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued; and
(9) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (9), not to exceed $50.0 million. Notwithstanding any other provision For purposes of determining compliance with this Section 4.09, in the maximum amount event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (9) above, or is entitled to be incurred pursuant to Section 4.09(a), the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that the Company or any Restricted Subsidiary may incur pursuant to complies with this Section 4.09 shall not 4.09. Indebtedness under the Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to be exceeded solely as a result of fluctuations have been incurred on such date in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
reliance on the exception provided by clause (1) the accreted value of the Indebtedness, in the case definition of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonPermitted Debt.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall Issuer will not issue any Disqualified Stock and shall the Issuer will not permit any of its Restricted Subsidiaries to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Issuer and the Guarantors may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Guarantors may issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the CompanyIssuer’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.00 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a4.10(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) (a) the incurrence by the Company and Issuer or any Guarantor of Indebtedness and letters of credit under Credit Facilities (and the incurrence by the Guarantors of Guarantees thereof) in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Issuer and revolving credit facilities measured at entry of such facility, not at the date of drawdownGuarantors thereunder) not to exceed the greater sum of (x) $20.0 300.0 million or plus (y) 50% the aggregate principal amount of Consolidated Cash Flow the Notes purchased, redeemed or otherwise acquired or retired for value by the most recently ended four full fiscal quarters for Issuer after the Issue Date through the date of incurrence and (b) the incurrence by the Issuer or any Guarantor of additional Indebtedness under Credit Facilities (and the incurrence by the Guarantors of Guarantees thereof) in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer and the Guarantors thereunder) not to exceed the amount, if any, by which financial statements are publicly available(x) the amount of the Borrowing Base as of the date of such incurrence exceeds (y) the aggregate amount of Indebtedness permitted to be incurred pursuant to the immediately preceding clause (a) as of the date of such incurrence, less, in the case of clause (a), the aggregate amount of all Net Proceeds of Asset Sales, applied by the Issuer or any Guarantor to repay any Indebtedness under Credit Facilities (and, in the case of any revolving credit Indebtedness under a Credit Facility, to effect a corresponding commitment reduction thereunder) pursuant to Section 4.13 and, in the case of each of clauses (a) and (b), less amounts outstanding under any Qualified Receivables Transactions;
(2) the incurrence by the Company and its Restricted Subsidiaries Issuer or any Guarantors of the Existing Indebtedness;
(3) the incurrence by the Company Issuer and the Guarantors its Restricted Subsidiaries of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and related Note Guarantees, the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement; and any Exchange Notes issued by the Issuer in exchange for Additional Notes, if any, issued in compliance with this Indenture and pursuant to a registered exchange offer and the related Note Guarantees;
(4) the incurrence by the Company Issuer or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price price, or cost of designconstruction or improvement, construction, installation of property (real or improvement or lease of propertypersonal), plant or equipment used in the business of the Company Issuer or any of its Restricted Subsidiaries, Subsidiaries in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed exceed, at any time outstanding, the greater of (x) $15.0 million30.0 million or (y) 3% of Consolidated Tangible Assets of the Issuer;
(5) the incurrence by the Company Issuer or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was is permitted by this Indenture to be incurred under Section 4.09(a4.10(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (1415) or (1516) of this Section 4.09(b4.10(b);
(6) the incurrence by the Company Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company Issuer and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company Issuer or any Guarantor is the obligor on such Indebtedness, and such Indebtedness and the payee is owed to a Restricted Subsidiary that is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the CompanyIssuer, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Issuer or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company Issuer or a Restricted Subsidiary of the Companythereof, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company Issuer or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of businessbusiness for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;
(9) 8) the guarantee Guarantee by the Company Issuer or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company Issuer or a Restricted Subsidiary of the Company Issuer that was permitted to be incurred by another provision of this Section 4.094.10; provided that, in the case of a Guarantee of any Restricted Subsidiary that if the Indebtedness being guaranteed is subordinated to or pari passu not a Guarantor, such Restricted Subsidiary complies with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedSection 4.16;
(109) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09. Notwithstanding 4.10; provided, in each such case, that the amount thereof is included in Fixed Charges of the Issuer as accrued;
(10) the incurrence by the Issuer’s Unrestricted Subsidiaries of Non-Recourse Debt; provided, however, that if any other provision such Indebtedness ceases to be Non-Recourse Debt of this Section 4.09an Unrestricted Subsidiary, the maximum amount such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer that was not permitted by this clause (10);
(11) the Company incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit in respect of workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance; provided, however, that, upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;
(12) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Issuer or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Capital Stock of the Issuer or a Restricted Subsidiary, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that:
(a) such Indebtedness is not reflected on the balance sheet of the Issuer or any Restricted Subsidiary may incur pursuant (contingent obligations referred to this Section 4.09 shall in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be exceeded solely as a result reflected on that balance sheet for purposes of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
this clause (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtednessa)); and
(3b) the maximum assumable liability in respect of that Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of those noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Issuer and/or that Restricted Subsidiary in connection with that disposition;
(13) the issuance of Disqualified Stock or preferred stock by any of the Issuer’s Restricted Subsidiaries issued to the Issuer or another Restricted Subsidiary; provided that (i) any subsequent issuance or transfer of any Equity Securities that results in such Disqualified Stock or preferred stock being held by a Person other than the Issuer or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such shares of Disqualified Stock or preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute an issuance of such shares of Disqualified Stock or preferred stock that was not permitted by this clause (13);
(14) the incurrence by the Issuer or any of its Restricted Subsidiaries of obligations in respect of performance and surety bonds and completion Guarantees provided by the Issuer or such Restricted Subsidiary in the ordinary course of business;
(15) the incurrence by the Issuer or any Guarantor of Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (15), not to exceed $75.0 million;
(16) the incurrence by the Foreign Restricted Subsidiaries of the Issuer of Indebtedness in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Restricted Subsidiaries thereunder), including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (16), not to exceed $50.0 million;
(17) the incurrence of any Indebtedness by a Receivables Subsidiary that is not recourse to the Issuer or any other Restricted Subsidiary of the Issuer (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction; provided, that, the aggregate amount of Indebtedness under this clause (17), when aggregated with all Indebtedness outstanding under Section 4.10(b)(1), shall not exceed the maximum amount permitted under Section 4.10(b)(1);
(18) contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection in the ordinary course of business;
(19) the incurrence by the Issuer of Indebtedness to effect the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Parent, in each case held by any former or current employees, officers, directors or consultants of the Issuer or any of its Restricted Subsidiaries or their respective estates, spouses, former spouses or family members under any management equity plan or stock option or other management or employee benefit plan upon the death, disability or termination of employment of such Persons in an aggregate amount at any one time outstanding not to exceed the maximum amount of such acquisitions pursuant to Section 4.11(b)(5);
(20) the incurrence of Indebtedness of another Person secured the Issuer or any Restricted Subsidiary supported by a Lien on letter of credit issued pursuant to the assets Credit Agreement in a principal amount not in excess of the specified Person, the lesser of:
(A) the Fair Market Value stated amount of such assets at the date letter of determinationcredit; and
(B21) contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection in the amount ordinary course of business. For purposes of determining compliance with this Section 4.10, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (21) above, or is entitled to be incurred pursuant to Section 4.10(a), the Issuer will be permitted to classify such item of Indebtedness on the date of its incurrence, and from time to time may reclassify, in any manner that complies with this Section 4.10 at such time. Indebtedness under the other PersonCredit Agreement on date of this Indenture shall be deemed to have been incurred on such date pursuant to Section 4.10(b)(1).
Appears in 1 contract
Sources: Indenture (Broan-NuTone LLC)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or ), the Company may issue Disqualified Stock, Stock and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stockstock if, if in any such case, the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, 1.0 determined on a pro forma basis (including a pro forma application of the net proceeds therefromtherefrom and including as set forth in the definition of “Fixed Charge Coverage Ratio”), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof 4.09 will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or and/or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in pursuant to the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company Credit Facilities or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indentureotherwise; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, of all Indebtedness then classified as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness having been incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.reliance
Appears in 1 contract
Sources: Indenture (Penn National Gaming Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stockDisqualified Stock; provided, however, provided that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors may permit any Restricted Subsidiary to incur any Indebtedness (including Acquired Debt) or issue preferred stock, shares of Disqualified Stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Co-Issuer or any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Company’s Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters recent Test Period for which financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.00 to 11.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness (including Acquired Debt) had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter periodTest Period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company (and any Guarantor the guarantee thereof by the Guarantors) of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdownvalue thereof) not to exceed $175 million, less the greater aggregate amount of all repayments, optional or mandatory, of the principal of any term Indebtedness under a Credit Facility that have been made by the Company or any of its Restricted Subsidiaries since the Issue Date with the Net Proceeds of Asset Sales and less, without duplication, the aggregate amount of all repayments or commitment reductions with respect to any revolving credit borrowings under a Credit Facility that have been made by the Company or any of its Restricted Subsidiaries since the Issue Date as a result of the final application of the Net Proceeds of Asset Sales, in each case in accordance with Section 4.10(c) hereof (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableexcluding temporary reductions in revolving credit borrowings as contemplated by that covenant);
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIssue Date;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of propertyproperty (real or personal), plant or equipment used or useful in the business of the Company or any of its Restricted SubsidiariesSubsidiaries or incurred within 180 days thereafter, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed at any time outstanding the greater of (a) $15.0 million25 million and (b) 15% of EBITDA for the most recently ended Test Period (calculated on a pro forma basis) at the time of incurrence;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this the Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (915), (1316), (1417), (18), (19), (21), (22), (23) or and (1524) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company Company, the Co-Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Company Company, the Co-Issuer or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations obligations then due with respect to the Notes, in the case of the CompanyCompany or the Co-Issuer, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in to the ordinary course of businessextent constituting Indebtedness;
(9) (A) the guarantee by (i) the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company Guarantor that was permitted to be incurred by another provision of this Section 4.09; (ii) any of the non-Guarantor Subsidiaries of Indebtedness of any other non-Guarantor Subsidiary; and (iii) any of the Excluded Foreign Subsidiaries of Indebtedness of any other Excluded Foreign Subsidiary; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedguaranteed and (B) any incurrence by the Co-Issuer of Indebtedness as a co-issuer of Indebtedness of the Issuers that was permitted to be incurred by another provision of this Section 4.09;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) inadvertently drawn against insufficient fundsfunds in the ordinary course of business, so long as such Indebtedness is covered within five Business Days;
(1211) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of (i) workers’ compensation claims, self-insurance obligations, bankers’ acceptance and (ii) performance and surety bonds provided by the Company or a Restricted Subsidiary in the ordinary course of business;
(12) [Reserved]
(13) the incurrence of Indebtedness arising from that may be deemed to arise as a result of agreements of the Company or such any Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price or any similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock Equity Interests of a any Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion ; provided that the aggregate maximum liability associated with such provisions may not exceed the gross proceeds (including non-cash proceeds) of such business, assets or a Subsidiary for the purpose of financing such acquisitiondisposition;
(1314) to the extent constituting Indebtedness, the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by letters of credit, guarantees or other similar instruments supporting Hedging Obligations of the Company or any of its Restricted Subsidiaries (other than non-Guarantor Subsidiaries) permitted to be incurred by this Indenture;
(15) Indebtedness, Disqualified Stock or preferred stock of Persons or assets that are acquired by the Company or any Restricted Subsidiary of the Company or merged into the Company or a Restricted Subsidiary of the Company in accordance with the terms of the Indenture; provided that such Indebtedness, Disqualified Stock or preferred stock is not incurred in contemplation of such acquisition or merger; and provided further that after giving effect to such acquisition or merger, either:
(A) the Company would be permitted to incur at least $1 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; or
(B) the Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition or merger;
(16) Environmental CapEx Debt; provided, that prior to the incurrence of any Environmental CapEx Debt, the Company shall deliver to the Trustee an officer’s certificate designating such Indebtedness as Environmental CapEx Debt;
(17) Indebtedness incurred to finance Necessary Capital Expenditures; provided, that prior to the incurrence of any Indebtedness to finance Necessary Capital Expenditures, the Company shall deliver to the Trustee an Officer’s Certificate designating such Indebtedness as Necessary CapEx Debt;
(18) Indebtedness of the Company or any Restricted Subsidiary consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(19) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materialsContribution Indebtedness;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(1520) the incurrence by the Company and/or any of its Restricted Subsidiaries of Indebtedness that constitutes a Permitted Tax Lease;
(21) Indebtedness of the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Total Net Secured Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 shall not exceed 5.00 to 1.0, 1.00 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; andbasis;
(1622) the incurrence by the Company or and/or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1622), not to exceed the greater of (a) $35.0 million. The Company shall not incur35 million and (b) 20% of EBITDA for the most recently ended Test Period (calculated on a pro forma basis) at the time of incurrence and any Permitted Refinancing Indebtedness in respect thereof;
(23) (a) the Shawville Qualifying Credit Support and (b) to the extent constituting Indebtedness, obligations under the Shawville Pipeline Agreement, the Tenaska Secured Obligations and shall not permit any Guarantor to incur, any Indebtedness the LTSA Obligations; and
(including Permitted Debt24) that is contractually subordinated in right letters of payment to any other Indebtedness credit issued or outstanding as of the Company or such Guarantor unless such Indebtedness is also contractually subordinated Issue Date and related obligations under the Citi Letter of Credit Facility in right of payment an aggregate amount not to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. exceed $10,000,000.
(c) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1624) above of Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09; provided that Indebtedness incurred under the Exit Credit Agreement and any Permitted Refinancing Indebtedness that refunds, refinances or replaces the Exit Credit Agreement or any such Permitted Refinancing Indebtedness shall be deemed incurred in reliance on the exception provided by clause (1) of the definition of “Permitted Debt” and may not be reclassified. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding ; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued.
(d) For purposes of determining compliance with any other provision U.S. dollar-denominated restriction on the incurrence of this Section 4.09Indebtedness, the maximum U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed applicable U.S. dollar-dominated restriction to be exceeded solely if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as a result the principal amount of fluctuations in exchange rates or currency valuessuch refinancing Indebtedness does not exceed the principal amount of the Indebtedness being refinanced. The amount of any Indebtedness outstanding as of any date will be:
(1A) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2B) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3C) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Ai) the Fair Market Value of such assets at the date of determination; and
(Bii) the amount of the Indebtedness of the other Person, provided that any changes in any of the above shall not give rise to a default under this Section 4.09.
Appears in 1 contract
Sources: Indenture (NRG Rema LLC)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $315.0 million less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries since the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 millionmillion at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1512) of this Section 4.09(b)) hereof;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and other similar surety bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1612), not to exceed $35.0 20.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness ; and
(including Permitted Debt13) that is contractually subordinated in right the Senior Secured Notes outstanding on the date of payment to any other Indebtedness of the Company this Indenture until such Notes are repurchased or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisrepaid. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1612) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Aa) the Fair Market Value of such assets at the date of determination; and
(Bb) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Herbst Gaming Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if in each case the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock incurred, or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $950.0 million less any mandatory prepayments actually made thereunder (to the greater extent, in the case of payments of revolving credit Indebtedness, that the corresponding commitments have been permanently reduced) or scheduled payments actually made thereunder (x) $20.0 million or (y) 50% other than the repayment of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableInterim Term Loan using the net proceeds from the sale of the Initial Notes);
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees Guaranties to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees Guaranties to be issued pursuant to the Registration Rights Agreement;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4iv), not to exceed $15.0 million5% of Total Assets at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof 4.09 or clauses (2ii), (3iii), (4iv), (5), (8), (9), (13), (14v) or (15x) of this Section 4.09(b)paragraph;
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeGuaranty of such Guarantor, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or to hedge exposure to foreign currency fluctuations or commodity price risk with respect to any commodity purchases;
(9viii) (A) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company Guarantor that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Mark I Molded Plastics of Tennessee Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, 1 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 million or 85% of accounts receivable plus 60% of inventory and (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available$50.0 million;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, Attributable Debt, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing financing, whether or not incurred at the time of such cost or acquisition, all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment or intellectual property rights used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) 8% of Consolidated Net Tangible Assets and (y) $15.0 million20.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1514) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, ; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessObligations;
(9) the guarantee Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of customers for check cashing and short term lending products in the ordinary course of business consistent with past practices;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters performance and surety bonds or similar types of credit), performance, surety, appeal and other similar bonds obligations in the ordinary course of business;
(1112) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Daysbusiness days of being incurred;
(1213) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;; and
(1314) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries Guarantor of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 25.0 million. .
(c) The Company shall will not incur, and shall will not permit any Guarantor of its Restricted Subsidiaries to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor Restricted Subsidiary unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee of such Restricted Subsidiary on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. .
(d) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above of Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted permitted, in its sole discretion, to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by Section 4.09(b)(1). The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. .
(e) The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Aa) the Fair Market Value of such assets at the date of determination; and
(Bb) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Susser Holdings CORP)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Unless the Rating Condition is satisfied at the time of such action or event, the Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stockstock or Disqualified Stock; provided, however, that the Company and its Restricted Securities may incur Indebtedness (including Acquired Debt) or ), and the Company may issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a3.10(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of the Existing Indebtedness;
(ii) the incurrence by the Company and its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with ii) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available250 million;
(2iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementInitial Senior Subordinated Notes;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness (including successive refundings, refinancings or replacements) incurred pursuant to this clause (4iv), not to exceed $15.0 million50 million at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinancerefinance or replace Indebtedness (including successive refundings, replace, defease refinancings or discharge any Indebtedness replacements) (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under pursuant to the Fixed Charge Coverage Ratio test in Section 4.09(a3.10(a) hereof or clauses (2i), (3iii), (4iv), (5v), (8), (9ix), (13x), (14xi) or (15xiii) of this Section 4.09(b3.10(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any one or more of its Restricted SubsidiariesSubsidiaries (including any Person that becomes a Restricted Subsidiary in connection with such transaction) or between or among two or more Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary in connection with such transaction); provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated in right of payment to the prior payment Senior Subordinated Notes in full in cash of all Obligations then due with respect a manner comparable to the Notes, manner in which the case Senior Subordinated Notes are subordinated in right of the Company, or the Note Guarantee, in the case of a Guarantorpayment to Senior Debt; and
(B) (1x) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2y) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of of:
(A) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the Indenture and this Supplemental Indenture, to be outstanding;
(B) Currency Hedging Obligations relating to Indebtedness of the Company or any Restricted Subsidiary and/or to obligations to purchase or sell assets or properties; provided that such Currency Hedging Obligations do not increase the Indebtedness or other obligations of the Company or any Restricted Subsidiary otherwise than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;
(C) Commodity Price Protection Obligations for the purpose of protecting the Company and its Restricted Subsidiaries against fluctuations in the price of raw materials used in the ordinary course of its business; provided that such Commodity Price Protection Obligations do not increase the amount of Indebtedness or other obligations of the Company or any Restricted Subsidiary otherwise than as a result of fluctuations in commodity prices or by reason of fees, indemnities and compensation payable thereunder;
(9viii) the guarantee by the Company or any a Restricted Subsidiary of the Guarantors Company of Indebtedness of the Company or a Restricted Subsidiary of the Company (other than a Receivables Entity) that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed3.10;
(10ix) the incurrence by principal component of amounts outstanding under Qualified Receivables Transactions in an aggregate amount up to the greater of (A) $125 million and (B) 85% of the aggregate amount of the total Qualified Receivables of the Company or any of and its Restricted Subsidiaries of existing at the time such Indebtedness in is incurred, together with interest or any similar amounts payable with respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businessthereto;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16x) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred (including successive refundings, refinancings or replacements) pursuant to this clause (16x), not to exceed $35.0 50 million. The Company shall not incur, and shall not permit any Guarantor to incur, any ;
(xi) Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness a Restricted Subsidiary of the Company incurred and outstanding on or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment prior to the Notes and date on which such Restricted Subsidiary was acquired by the applicable Note Guarantee on substantially identical termsCompany or another Restricted Subsidiary; provided, however, that no on the date of such acquisition, after giving pro forma effect thereto and any related transactions as if the same had occurred at the beginning of the applicable four-quarter period, the Company would be permitted to incur at least $1.00 of additional Indebtedness will be deemed pursuant to be contractually subordinated the Fixed Charge Coverage Ratio test in right of payment to any other Section 3.10(a) hereof;
(xii) Indebtedness of the Company solely or any of its Restricted Subsidiaries arising from the honoring by virtue a bank or other financial institution of being unsecured a check, draft or by virtue similar instrument inadvertently drawn against insufficient funds in the ordinary course of being secured business; provided, however, that such Indebtedness is extinguished within five business days of incurrence; and
(xiii) Indebtedness under the Chilean credit facility, dated as of December 22, 2000, between the Company and Banco sud Americano, not to exceed the undrawn amounts under such credit facility on a first or junior Lien basis. the date of this Supplemental Indenture.
(c) For purposes of determining compliance with this Section 4.09, 3.10:
(i) in the event that an item of proposed Indebtedness or any portion thereof meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xiii) above of Section 3.10(b) hereof, or is entitled permitted to be incurred pursuant to the Fixed Charge Coverage Ratio test in Section 4.09(a3.10(a) hereof, the Company will be permitted to classify such item of Indebtedness or portion thereof as being (A) within any one or more such categories in respect of which it meets the criteria, (B) permitted to be incurred pursuant to such Fixed Charge Coverage Ratio test (to the extent applicable), and/or (C) any combination of the foregoing;
(ii) Indebtedness under the Credit Agreement outstanding on the date on which Senior Subordinated Notes are first issued and authenticated under the Indenture and this Supplemental Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (ii) of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The 3.10(b) hereof;
(iii) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09Stock; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other IndebtednessCompany as accrued; and
(3iv) in respect for purposes of determining compliance with any dollar- denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of another Person secured by a Lien such Indebtedness incurred pursuant thereto shall be calculated based on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at relevant currency exchange rate in effect on the date of determination; and
(B) the amount of the that such Indebtedness of the other Personwas incurred.
Appears in 1 contract
Sources: Third Supplemental Trust Indenture (Louisiana Pacific Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or and issue Disqualified Stock, Stock and the Guarantors any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue preferred stock, if either:
(i) the Consolidated Leverage Ratio for at the end of the Company’s 's most recently ended four full fiscal quarters quarter (the "Reference Period") for which financial statements are publicly a consolidated balance sheet of the Company is available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater less than 7.0 5.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.the Reference Period; or
(bii) the Consolidated Capital Ratio at the end of the Reference Period would have been less than 2.0 to 1.0, determined after giving effect to the incurrence or issuance of such Indebtedness or Disqualified Stock and, to the extent set forth in the definitions used herein, on a pro forma basis (including, to the extent set forth in the definitions used herein, a pro forma application of the net proceeds therefrom). The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1a) the incurrence by the Company and or any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an or Permitted Vendor Facilities; provided that the aggregate principal amount at any one time of all Indebtedness of the Company and its Restricted Subsidiaries outstanding under this clause all Credit Facilities or Permitted Vendor Facilities after giving effect to such incurrence (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company thereunder) does not exceed an amount thereunder whether equal to $725.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or not drawn and revolving credit facilities measured at entry any of such facility, not at its Restricted Subsidiaries since the date of drawdown) not Issue Date to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablepermanently repay Indebtedness under a Credit Facility pursuant to Section 4.10 hereof;
(2b) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3c) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and Notes, the related Note Guarantees to be issued on the date of this Indenture and Euro Notes, the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementEuro Exchange Notes;
(4d) the incurrence by the Company or any of its Restricted Subsidiaries of Purchase Money Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for and Vendor Financing Indebtedness provided (A) that the purpose of financing all or any part amount thereof does not exceed 100% of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of Company's and its Restricted Subsidiaries' aggregate cost (determined in accordance with GAAP in good faith by the Board of Directors) of the construction, acquisition, development, engineering, installation and improvement of the applicable Telecommunications Assets and (B) in an aggregate principal amountthe case of the incurrence of either Purchase Money Indebtedness or Vendor Financing Indebtedness by a Restricted Subsidiary, including all Permitted Refinancing such Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 millionshall be Qualified Subsidiary Indebtedness;
(5e) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof or clauses (2b), (3c), (4d), (5l), (8), (9n), (13), (14o) or (15p) of this Section 4.09(b)paragraph;
(6f) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiaries and the issuance of preferred stock by a Restricted Subsidiary to the Company or another Restricted Subsidiary of the Company; provided, however, that:
(Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bii) (1A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness or preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2B) any sale or other transfer of any such Indebtedness or preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof; shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6f);
(7g) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging interest or foreign currency exchange rate risk with respect to any floating rate Indebtedness or foreign currency based Indebtedness, respectively, that is permitted by the terms of this Indenture to be outstanding; provided that the notional amount of any such Hedging Obligation does not exceed the amount of Indebtedness or other liability to which such Hedging Obligation relates; and provided further that such Hedging Obligations are not incurred for speculative purposes;
(9h) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a any Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(10i) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09Stock; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, in the case of any Indebtedness issued with original issue discountCompany as accrued;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (360networks Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), ) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and any of the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Company's Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.00 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1i) the incurrence by the Company and any Guarantor or its Restricted Subsidiaries of term Indebtedness and under the Credit Facility, letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and its Restricted Subsidiaries thereunder) and related Guarantees under the Credit Facility; PROVIDED that the aggregate principal amount thereunder whether of all term Indebtedness and letters of credit of the Company and its Restricted Subsidiaries (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) outstanding under the Credit Facility after giving effect to such incurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (i) does not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not exceed an amount equal to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available550.0 million;
(2ii) the incurrence by the Company or its Restricted Subsidiaries of revolving credit Indebtedness under the Credit Facility, letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) and related Guarantees under the Credit Facility; PROVIDED that the aggregate principal amount of all revolving Indebtedness and letters of credit of the Company and its Restricted Subsidiaries (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) outstanding under the Credit Facility after giving effect to such incurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (ii), does not exceed $700.0 million less the aggregate amount of Asset Sale proceeds applied by the Company and its Restricted Subsidiaries to permanently reduce the availability of revolving credit Indebtedness under the Credit Agreements pursuant to the provisions of Section 4.10 hereof;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iv) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes Senior Notes, the Senior Subordinated Notes, the Senior Subsidiary Guarantees and the related Subordinated Subsidiary Guarantees limited in aggregate principal amount, without duplication, to amounts outstanding under the Senior Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related this Senior Subordinated Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture as of their respective dates;
(4v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness incurred pursuant to this clause (4v), not to exceed $15.0 million5% of Total Assets;
(5vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
that (Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the NotesSenior Subordinated Note and this Senior Subordinated Note Indenture, in the case (ii) if a Restricted Subsidiary of the CompanyCompany is the obligor on such Indebtedness, or such Indebtedness is expressly subordinated to the Note Guarantee, prior payment in the case full in cash of a Guarantor; and
such Restricted Subsidiary's Senior Subsidiary Guarantee and (B) (1iii)(A) any subsequent event or issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vii);
(7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the normal course of business for the purpose of fixing or hedging currency, commodity or interest rate risk (including with respect to any Indebtedness that is permitted by the terms of this Senior Subordinated Note Indenture to be outstanding in connection with the conduct of their respective businesses and not for speculative purposes);
(ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in the ordinary course of businessbusiness solely in respect of performance, surety and similar bonds, completion or performance guarantees or standby letters of credit issued for the purpose of supporting workers' compensation liabilities of the Company or any of its Restricted Subsidiaries, to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money to others;
(9x) the incurrence of Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary;
(xi) the incurrence by a Restricted Subsidiary of the Company of Indebtedness in connection with and in contemplation of, the concurrent disposition of such Restricted Subsidiary to the stockholders of the Company; PROVIDED that such disposition occurs concurrently with such incurrence and following such disposition, neither the Company nor any of its Restricted Subsidiaries has any liability with respect to such Indebtedness;
(xii) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is Non-Recourse Debt with respect to the Company and its other Restricted Subsidiaries (except for Standard Securitization Undertakings and Limited Originator Recourse);
(xiii) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16xiv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (16xiv), not to exceed $35.0 75.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xiv) above as of the date of incurrence thereof or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09 as of the date of incurrence thereof, the Company will be permitted to shall, in its sole discretion, classify or reclassify such item of Indebtedness on as of the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, incurrence thereof in any manner that complies with this Section 4.09 and such item of Indebtedness shall be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph of this Section 4.09. The accrual Accrual of interest, the accretion or amortization of original issue discount, accreted value and the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock), if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a4.08(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness or issuances of Disqualified Stock or preferred stock, as applicable (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor the Guarantors of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xa) $20.0 million 50.0 million, less the aggregate amount of all permanent commitment reductions with respect to any revolving credit borrowings under one or more Credit Facilities that have been made by the Company or any of its Restricted Subsidiaries since the date of this Indenture and (yb) 5019.0% of the Company’s Consolidated Cash Flow for Net Tangible Assets; provided, however, that in no event shall the most recently ended four full fiscal quarters for which financial statements are publicly availableaggregate principal amount of Indebtedness under such Credit Facilities that is not revolving credit borrowings exceed $35.0 million;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and any PIK Notes and any increases in the Exchange Notes principal amount of outstanding Global Notes, in each case as a result of the issuance of PIK Interest and the related Note Guarantees to be issued pursuant to (but not any Additional Notes for the Registration Rights Agreementavoidance of doubt);
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of, or to lease of property, plant plant, equipment or equipment other assets (including Capital Stock) used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), ) at any time outstanding not to exceed $15.0 5.0 million;
(5) Indebtedness (including Acquired Debt) of (x) the Company or any Guarantor incurred or issued to finance an acquisition of all or substantially all of the assets of another Person (whether through merger, consolidation, the direct purchase of such assets or the acquisition of Capital Stock of the person owning such assets) or (y) Persons that are acquired by the Company or a Guarantor; provided that after giving effect to the incurrence of such Indebtedness, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (5), and such acquisition, merger or consolidation (in each case with such pro forma adjustments as are contemplated by the definition of “Fixed Charge Coverage Ratio”), the Company would have been able to incur $1.00 of additional Indebtedness pursuant to the first paragraph of this Section after giving effect to the incurrence of such Indebtedness pursuant to this clause (5);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany IndebtednessIndebtedness between or among the Company and/or any of its Restricted Subsidiaries) that was permitted by this Indenture to be incurred under Section 4.09(a4.08(a) hereof or clauses (2), (3), (4), (5), (8), (96), (13), (1415) or (1516) of this Section 4.09(b4.08(b);
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and and/or any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeGuarantee of such Guarantor, in the case of a Guarantor; and
(B) any (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and Company, or (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (67);
(7) 8) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, thatthat any:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; andor
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7)8);
(8) 9) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness and not for speculative purposes;
(910) the guarantee Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.094.08; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Note Guarantee shall be subordinated or pari passu, as applicable, to other Indebtedness of the Guarantor to the same extent as the Indebtedness guaranteed;
(1011) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, insurance contracts, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and surety bonds and other similar bonds guarantees of obligations not constituting Indebtedness in the ordinary course of business;
(1112) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business DaysDays following receipt by the Company or such Restricted Subsidiary of notice or such event;
(1213) the incurrence by any obligation arising from agreements of the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price price, earn outs, or similar obligationobligations, in each case, incurred or assumed in connection with the disposition or acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, (including, without limitation, letters assets acquired by a Restricted Subsidiary of credit the Company and any Person that, as a result of such transaction, becomes a Restricted Subsidiary of the Company) in a transaction permitted by this Indenture, provided the maximum liability in respect of all such Indebtedness incurred in connection with a disposition shall at no time exceed the gross proceeds including noncash proceeds (the Fair Market Value of such noncash proceeds being measured at the time received and without giving effect to procure raw materialsany subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(14) the incurrence by Foreign Subsidiaries Indebtedness of the Company or a Restricted Subsidiary to the extent that the net proceeds thereof are promptly deposited to effect Legal Defeasance or Covenant Defeasance of Indebtedness in the ordinary course Notes or to effect satisfaction and discharge of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingthis Indenture;
(15) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate amount at any time outstanding pursuant to this clause (15), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (15), not to exceed $8.0 million (or the Company or any Restricted Subsidiary equivalent thereof, measured at the time of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such each incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefromin applicable foreign currency), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 10.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.094.08, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) appearing above in this Section 4.08(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof4.08(a), the Company will shall be permitted to classify and divide such item of Indebtedness on the date of its incurrence, or and later reclassify and redivide all or a portion of such item of IndebtednessIndebtedness among any one or more of such clauses and/or Section 4.08(a), in any manner that complies with this Section 4.094.08. Indebtedness under Credit Facilities outstanding on the date of this Indenture shall initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interestinterest or dividends on Disqualified Stock, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock Disqualified Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.094.08; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges (to the extent required by the definition of such term) of the Company as accrued. For purposes of determining compliance with any U.S. dollar denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09Section, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. In determining the amount of Indebtedness outstanding, the outstanding amount of any particular Indebtedness of any Person shall be counted only once and any obligation of such person or any other Person under any guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall be disregarded so long as it is permitted to be incurred by the Person or Persons incurring such obligation. The amount of any Indebtedness outstanding as of any date will shall be:
(1) the accreted value of the Indebtedness, in the case cause of any Indebtedness issued with original issue discount;
(2) with respect to contingent obligations, the principal amount maximum liability upon the occurrences of the Indebtedness, in contingency giving rise to the case of any other Indebtedness; andobligation;
(3) with respect to Hedging Obligations, the net amount payable, if any, by the specified Persons if such Hedging Obligations terminated at that time due to default by such Person;
(4) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and;
(B) the amount of the such Indebtedness of the other Person;
(5) the maximum amount the Company and its Restricted Subsidiaries would become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, in the case of any Disqualified Stock;
(6) the amount of the liability in respect thereof determined in accordance with GAAP, in the case of Indebtedness issued at a price that is less than the principal amount thereof; and
(7) the principal amount of the Indebtedness, in the case of any other Indebtedness.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock or Disqualified Stock; provided, however, that the Company Issuers may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue preferred stockPreferred Stock or Disqualified Stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock Preferred Stock is issued, as the case may be, would have been no greater than 7.0 at least 2.25 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock Preferred Stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof this covenant will not prohibit the incurrence of any of the following items of Indebtedness or issuances of Disqualified Stock or Preferred Stock, as applicable (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall Issuer will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall Issuer will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the CompanyIssuer’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1a) the incurrence by the Company Issuer and any Guarantor Restricted Subsidiary of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with a) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Issuer and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater sum of (x) $20.0 million or 1.0 billion plus (y) 502.5% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableAdjusted Total Assets;
(2b) the incurrence by the Company Issuer and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “''incur”'') any Indebtedness (including Acquired Debt), ) and that the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, provided that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock if, in each case, the Company's Debt to Adjusted Consolidated Cash Flow Ratio at the time of incurrence of the Indebtedness or the issuance of the preferred stock, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds from such incurrence or issuance as if the Leverage Ratio for same had occurred at the Company’s beginning of the most recently ended four full fiscal quarters quarter period of the Company for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may beavailable, would have been no greater than 7.0 7.5 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness or to the issuance of any of the following items of Disqualified Stock or preferred stock (collectively, “''Permitted Debt”''):
(1) the incurrence by the Company and or any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured its Restricted Subsidiaries thereunder) at entry of such facility, not at the date of drawdown) any one time outstanding not to exceed the greater product of (x) $20.0 million or (y) 50% 150,000 times the number of Consolidated Cash Flow for Completed Towers on the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and of the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be Discount Notes, each issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementhereof;
(4) the issuance by the Company of additional shares of its 12 3/4% Senior Exchangeable Preferred Stock due 2010 solely for the purpose of paying dividends thereon and the incurrence by the Company of Indebtedness represented by the Company's 12 3/4% Senior Subordinated Exchange Debentures due 2010;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (45), not to exceed $15.0 million10.0 million at any one time outstanding;
(56) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refundextend, refinance, renew, replace, defease or discharge refund Indebtedness of the Company or any Indebtedness of its Restricted Subsidiaries or Disqualified Stock of the Company (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof 4.09 or clauses (2), (3), (4), (5), (8), (9), (13), (14) or this clause (156) of this Section 4.09(b)paragraph;
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case Notes of the Company, or the Note Guarantee, in the case of a Guarantor; andsuch series and that:
(Bii) (1A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) in addition to Indebtedness incurred by the Company pursuant to clauses (2) through (14) below, the incurrence by the Company and any Guarantor its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xA) $20.0 350.0 million or and (yB) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture Issue Date and the Exchange Notes and the related Note Guarantees to be issued pursuant to under the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million50.0 million outstanding at any time;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses clause (2), (3), (4), (5), (8), (9), (13), (14) or (1513) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly-Owned Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the applicable Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly-Owned Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Wholly-Owned Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Wholly-Owned Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary normal course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the Notes, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of performance bonds, bankers’ acceptances, workers’ compensation claims, surety or appeal bonds, payment obligations in connection with self-insurance or similar obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds bank overdrafts in the ordinary normal course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered repaid within five Business Days;
(12) Indebtedness of (A) the Company or a Restricted Subsidiary of the Company to the extent such Indebtedness was Indebtedness of a Person that was merged, consolidated or amalgamated into the Company or such Restricted Subsidiary of the Company or (b) a Restricted Subsidiary that was incurred and outstanding prior to the date on which such Restricted Subsidiary was acquired by the Company or a Restricted Subsidiary of the Company, in each case other than Indebtedness incurred in contemplation of, or in connection with, the transaction or series of related transactions pursuant to which such Person was merged, consolidated or otherwise acquired by the Company or a Restricted Subsidiary of the Company; provided, however, that for any such Indebtedness outstanding at any time under this clause (12), after giving pro forma effect thereto on the date of such acquisition, merger, consolidation or amalgamation, either (A) the Company or such Restricted Subsidiary would have been able to incur $1.00 of additional Indebtedness pursuant to Section 4.09(a) hereof or (B) the Fixed Charge Coverage Ratio for the Company or such Restricted Subsidiary, as applicable, would be greater than the Fixed Charge Coverage Ratio for the Company immediately prior to such transaction;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such any Restricted Subsidiary providing for indemnification, adjustment of purchase price price, “earn out” or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any businessassets, assets or including shares of Capital Stock of a SubsidiaryStock, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for in accordance with the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date terms of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(1614) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 50.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will shall be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person. Notwithstanding the foregoing, (i) all Indebtedness of the Company outstanding on the Issue Date shall be permitted and (ii) the Company shall be permitted to issue shares of Company common stock.
Appears in 1 contract
Sources: Indenture (Titan International Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockDisqualified Stock and any Foreign Subsidiary may incur Indebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of Disqualified Stock, as set forth below (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown4.09(b)(i) not to exceed $1,000.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for any Restricted Subsidiary to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Agreement and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, pursuant to Section 4.10;
(2ii) the incurrence by the Company and its any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture hereof and the Exchange Notes and the related Note any Guarantees to be issued pursuant to the Registration Rights Agreementthereof by any Guarantor;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (44.09(b)(iv), not to exceed the greater of (i) $15.0 million100.0 million and (ii) 5.0% of Consolidated Tangible Assets, at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2ii), (3iii), (4v), (5), (8), (9), (13), (14) or (15xi) of this Section 4.09(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiary; provided, however, that:
(A1) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B2) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Subsidiary; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (64.09(b)(vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or for hedging foreign currency exchange risk, in each case to the extent the Hedging Obligations are incurred in the ordinary course of businessthe Company’s financial management and not for any speculative purpose;
(9viii) the guarantee Guarantee by the Company or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision ; provided, in each such case, that the amount thereof is included in Fixed Charges of this Section 4.09, the maximum amount of Indebtedness that Company as accrued;
(x) the incurrence by the Company or any Restricted Subsidiary may incur of Indebtedness, including Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, incurred in respect of workers’ compensation claims, self-insurance obligations, performance, proposal, completion, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; provided that the underlying obligation to perform is that of the Company or its Restricted Subsidiaries and not that of the Company’s Unrestricted Subsidiaries; provided further that such underlying obligation is not in respect of borrowed money;
(xi) the incurrence by the Company or any Restricted Subsidiary of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this Section 4.09 shall clause (xi), not be deemed to be exceeded solely as exceed $125.0 million;
(xii) the incurrence by the Company or any Restricted Subsidiary of Indebtedness, including but not limited to Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, arising from agreements of the Company or a result Restricted Subsidiary providing for indemnification, adjustment of fluctuations purchase price or similar obligations, in exchange rates each case, incurred or currency values. The amount assumed in connection with the disposition of any business, assets or Equity Interests of the Company or a Restricted Subsidiary, other than guarantees of Indebtedness outstanding as incurred by any Person acquiring all or any portion of any date will be:such business, assets or Equity Interests for the purpose of financing such acquisition;
(1xiii) the accreted value incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from the Indebtednesshonoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of any daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness issued with original issue discount;is extinguished within five Business Days of incurrence; or
(2xiv) the principal amount issuance of preferred stock of a Restricted Subsidiary to the IndebtednessCompany that is pledged to secure the Credit Agreement, provided that any subsequent transfer that results in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured such preferred stock being held by a Lien on Person other than the assets Company or a Restricted Subsidiary will be deemed to constitute an issuance of the specified Person, the lesser of:
preferred stock not permitted by this clause (A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personxiv).
Appears in 1 contract
Sources: Execution Version (Geo Group Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.5 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $150.0 million less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries since the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture (which, for the avoidance of doubt, excludes any Additional Notes) and the Exchange Notes and the related Note Guarantees to be issued pursuant to in exchange therefor in accordance with the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or installation, improvement or lease of propertyproperty (real or personal), plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million5.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1x) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2y) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations provided that such Hedging Obligations are entered into, in the ordinary course reasonable judgment of businessthe Company, to protect the Company and its Restricted Subsidiaries from fluctuations in the applicable rates and not for purposes of speculation;
(9) the incurrence by a Restricted Subsidiary of the Company of Acquired Debt that was outstanding on the date that such Restricted Subsidiary was acquired, directly or indirectly, by the Company; provided that (a) such Restricted Subsidiary incurred such Indebtedness prior to the date that the Company directly or indirectly acquired such Restricted Subsidiary, (b) such Indebtedness was not incurred in connection with, or in contemplation of, such acquisition and (c) the Company’s Fixed Charge Coverage Ratio immediately following such acquisition and incurrence would be not less than the Company’s Fixed Charge Coverage Ratio immediately prior to such acquisition and incurrence;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, “earn out,” stock-price guarantee or similar obligations, in each case, incurred in connection with the acquisition or disposition of any Permitted Business, assets used or useful in a Permitted Business or a Restricted Subsidiary of the Company in accordance with the terms of this Indenture, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such Permitted Business, assets or Restricted Subsidiary for the purposes of financing such acquisition; provided that, with respect to any such disposition, the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(11) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(1012) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and other similar surety bonds in the ordinary course of businessbusiness or as required from time to time by law or state licensing or regulatory authorities;
(1113) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1214) the incurrence by the Company or any Restricted Subsidiary Guarantor of unsecured Indebtedness arising from agreements evidenced by promissory notes that are subordinated in right of payment to the Notes or the Note Guarantees (as applicable) issued to current, future or former directors, officers, employees or consultants of the Company or any of its Restricted Subsidiaries (or their respective spouses) in lieu of cash payments for Equity Interests being repurchased from such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingPerson;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom)Guarantors of additional Indebtedness, as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence issuance by the Company of Disqualified Stock or any the issuance by a Guarantor of its Restricted Subsidiaries of additional Indebtedness Preferred Stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1615), not to exceed $35.0 25.0 million; and
(16) Indebtedness incurred by Foreign Subsidiaries in an aggregate principal amount not to exceed $20.0 million at any time outstanding. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture shall initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will shall be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Fti Consulting Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and that the Company and the Company Guarantors shall not issue any Disqualified Stock and the Company shall not permit any of its Restricted Subsidiaries which are not Guarantors to issue any shares of preferred stock; provided, however, that the Company and any Guarantor may incur Indebtedness (including Acquired DebtDebt and Indebtedness under the New Credit Facility) or issue shares of Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, Stock if the Leverage Consolidated Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, and such net proceeds been applied, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof 4.09 will not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and or any Guarantor of its Restricted Subsidiaries of term Indebtedness and letters of credit under the New Credit Facilities in an Facility; provided that the aggregate principal amount at any one time of all term Indebtedness outstanding under the New Credit Facility after giving effect to each such incurrence does not exceed an amount equal to $115.0 million plus an additional $25.0 million of deferred term Indebtedness which shall be utilized to effect the Rainbow Royalty Buyout and to repurchase the Rainbow Note Payable, less the aggregate amount of all principal repayments actually made from time to time after the date of this clause Indenture with respect to such Indebtedness (1)(with other than principal payments made from any permitted refinancings thereof);
(ii) the incurrence by the Company or any of its Restricted Subsidiaries of revolving credit Indebtedness (inclusive of letters of credit being credit, which shall be deemed to have a principal amount equal to the maximum face potential liability of the Company and its Restricted Subsidiaries thereunder) under the New Credit Facility; provided that the aggregate principal amount thereunder whether or not drawn and of all revolving credit facilities measured at entry of Indebtedness outstanding under the New Credit Facility after giving effect to such facilityincurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (ii), does not at the date of drawdown) not to exceed the greater of (x) $20.0 90.0 million or and (y) 50the sum of (A) 75% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablebook value of the accounts receivable of the Company and its Restricted Subsidiaries and (B) 40% of the book value of the inventory of the Company and its Restricted Subsidiaries;
(2iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iv) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementNotes;
(4v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted Subsidiaries, in an Subsidiary; provided that the aggregate principal amountamount of such Indebtedness that is not Non-Recourse Debt (except as to the property, plant or equipment being financed) does not exceed $20.0 million at any time outstanding (including all any Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4relating thereto), not to exceed $15.0 million;
(5vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) or Disqualified Stock that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), other than pursuant to clause (3), (4), (5), (8), (9), (13), (14i) or (15ii) of this Section 4.09(bparagraph);
(6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Notes and (B) )
(1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and or (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7viii) the issuance incurrence by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7)Interest Swap and Hedging Obligations;
(8) ix) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations (A) Indebtedness in respect of performance, completion, guarantee, surety or similar bonds provided by the Company or any Restricted Subsidiary in the ordinary course of business, or (B) Indebtedness in respect of any bond or surety obligation in order to prevent the loss or material impairment of or to obtain a Gaming License or as otherwise required by an order of any Gaming Authority to the extent required by applicable law and consistent in character and amount with customary industry practice;
(9x) the incurrence by the Company or any of its Restricted Subsidiaries of reimbursement obligations with respect to letters of credit in respect of workers' compensation claims consistent in character and amount with customary industry practice; 40 41 (xi) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Alliance Gaming Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
): (1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 950.0 million less the aggregate amount of all (i) Secured Indebtedness incurred in reliance on Section 4.12(a)(1) and (ii) Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay permanently any term Indebtedness under a Credit Facility or to repay permanently any revolving credit Indebtedness under a Credit Facility and effect a corresponding permanent commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% the maximum principal amount of Consolidated Cash Flow for Indebtedness that could be incurred such that after giving effect to such incurrence, the most recently ended four full fiscal quarters for which financial statements are publicly available;
Secured Leverage Ratio of the Company would be no greater than 3.25 to 1.00 (calculated assuming all Indebtedness incurred under this clause (1) is secured and without netting the cash proceeds of any such Indebtedness); (2) the incurrence by the Company and any of its Restricted Subsidiaries of the Existing Indebtedness;
; (3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds, economic development loans and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an ; provided that the aggregate principal amountamount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (43), shall not to exceed the greater of (x) $15.0 million;
75.0 million and (5y) 5.0% of Consolidated Total Assets; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was -52- permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1517) of this Section 4.09(b);
; (65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
: (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
and (B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5); (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
: (A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
and (B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (6); (7);
(8) ) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
business and entered into for bona fide hedging purposes (9and not for speculative purposes) as determined in good faith by the Board of Directors or senior management of the Company; (8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
; (9) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance; provided, however, that either upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence or self-insurance; (10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, health and other types of social security benefits, unemployment and other self-insurance obligations, bankers’ acceptancesproperty, completion guarantees (including related letters of credit), performance, surety, appeal and casualty or liability insurance or other similar bonds in bonds, the ordinary course financing of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued insurance premiums in the ordinary course of business, includingbankers’ acceptances, without limitationperformance, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingsurety, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrencejudgment, would have been no greater than 4.5 to 1.0appeal, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom)bid and performance bonds, as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted valuecash management obligations and netting, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.overdraft
Appears in 1 contract
Sources: Indenture (Patrick Industries Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company Borrower shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company Borrower may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if in each case the Leverage Fixed Charge Coverage Ratio for the Company’s Borrower's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock incurred, or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 5.8 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company Borrower and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Borrower and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $400,000,000 less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Facilities and to effect a corresponding commitment reduction thereunder pursuant to Section 5.9 of this Agreement;
(2ii) the incurrence by the Company Borrower and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) Indebtedness under this Agreement and the other Loan Documents;
(iv) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligationsobligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company Borrower or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4iv), not to exceed $15.0 million5% of Total Assets at any time outstanding;
(5v) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture Agreement to be incurred under the first paragraph of this Section 4.09(a) hereof 5.8 or clauses (2ii), (3iii), (4iv), (5), (8), (9), (13), (14v) or (15x) of this Section 4.09(b)paragraph;
(6vi) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company Borrower and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company Borrower or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the NotesLoans, in the case of the CompanyBorrower, or the Note GuaranteeGuaranty of such Guarantor, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Borrower or a Restricted Subsidiary of the Company thereof and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company Borrower or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Borrower or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing, hedging or managing interest rates with respect to Indebtedness that is permitted by the terms of this Agreement to be outstanding or to hedge exposure to foreign currency fluctuations or commodity price risk with respect to any commodity purchases;
(9A) the guarantee by the Company Borrower or any of the Guarantors of Indebtedness of the Company Borrower or a Restricted Subsidiary of the Company Guarantor that was permitted to be incurred by another provision of this Section 4.095.8; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;and
(10B) the incurrence guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of the Borrower that is not a Guarantor of Indebtedness arising from agreements of another Restricted Subsidiary of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of Borrower that is not a Subsidiary, other than guarantees of Indebtedness Guarantor that was permitted to be incurred by any Person acquiring all or any portion another provision of such business, assets or a Subsidiary for the purpose of financing such acquisitionthis Section 5.8;
(13ix) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock; provided, in each such case, that the amount thereof is included in Fixed Charges of the Borrower as accrued;
(x) the incurrence by the Borrower or any of its Restricted Subsidiaries of additional Indebtedness or Disqualified Stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (x), not to exceed $50,000,000;
(xi) the incurrence by the Borrower's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower that was not permitted by this clause (xi);
(xii) the incurrence of Indebtedness (including letters of credit) in respect of workers' compensation claims, self-insurance obligations, performance, surety, bid or similar bonds and completion guaranties provided by the Borrower or one of its Restricted Subsidiaries in the ordinary course of business and consistent with past practices;
(xiii) Indebtedness arising from agreements of the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earn out or other similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Borrower and its Restricted Subsidiaries in connection with such disposition;
(xiv) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is Non-Recourse Debt (except for Standard Securitization Undertakings) with respect to the Borrower and its other Restricted Subsidiaries;
(xv) Indebtedness of the Borrower evidenced by promissory notes subordinated to the Loans issued to employees of the Borrower and its Subsidiaries in lieu of cash payment at any time for Equity Interests of DASI being repurchased from such employees; provided; that the aggregate amount of such Indebtedness does not exceed $5,000,000 at any one time outstanding;
(xvi) guaranties of Indebtedness of any other person incurred by the Borrower or a Restricted subsidiary in the ordinary course of business in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding;
(xvii) Indebtedness consisting of take-or-pay obligations contained in supply agreements entered into by the Borrower or its Subsidiaries in the ordinary course; and
(xviii) Indebtedness of Foreign Restricted Subsidiaries that are not Guarantors permitted by Section 5.12 hereof. The Borrower will not incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Borrower unless such Indebtedness is also contractually subordinated in right of payment to the Loans on substantially identical terms, provided that no Indebtedness of the Borrower will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Borrower solely by virtue of being unsecured or having a junior Lien. For purposes of determining compliance with this Section 5.8, in the event that an incurrence item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xvii) above, or an issuance of Disqualified Stock for purposes is entitled to be incurred pursuant to the first paragraph of this Section 4.095.8, the Borrower shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 5.8. Notwithstanding any other provision All borrowings outstanding on the date of this Section 4.09, Agreement under the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not Credit Facilities will be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
have been borrowed pursuant to clause (1i) the accreted value of the Indebtedness, in the case definition of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonPermitted Debt.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), Indebtedness) and that the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that (x) the Company may incur Indebtedness (including Acquired DebtIndebtedness) or issue shares of Disqualified Stock, Stock and the Guarantors (y) a Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockIndebtedness, in each case if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.. The foregoing provisions will not apply to:
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor of Indebtedness under the Credit Agreement (and letters of credit under Credit Facilities guarantees thereof by the Guarantors) in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Subsidiaries thereunder) not to exceed the greater of (x) $20.0 175.0 million or and (y) 50the sum of (A) 80% of Consolidated Cash Flow for Eligible Accounts Receivable and (B) 65% of Eligible Inventory, less, in the most recently ended four full fiscal quarters for which financial statements are publicly availablecase of each of clause (x) and clause (y), the aggregate amount of all Net Proceeds of Asset Sales applied to permanently reduce the commitments with respect to such Indebtedness pursuant to Section 4.10.;
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on incurrence by the date Guarantors of this Indenture and Indebtedness represented by the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementSubsidiary Guarantees;
(4iii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease ObligationsObligations (whether or not incurred pursuant to sale and leaseback transactions), mortgage financings financing or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiariessuch Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 million5.0 million at any time outstanding;
(5iv) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refundextend, refinance, renew, replace, defease or discharge any refund, Existing Indebtedness (other than intercompany Indebtedness) or Indebtedness that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2other than any such Indebtedness incurred pursuant to clause (i), (3ii), (4iii), (5v), (8), (9vi), (13), vii) (14viii) or (15ix) of this Section 4.09(bparagraph);
(6v) the incurrence by the Company or any of its Restricted Wholly Owned Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Wholly Owned Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
that (Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated subordinate to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Notes and (B) (1ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Wholly Owned Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Wholly Owned Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7vi) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk that is permitted by the terms of this Indenture to be incurred;
(vii) the incurrence by the Company of Hedging Obligations under commodity hedging and currency exchange agreements; PROVIDED that, such agreements were entered into in the ordinary course of business for the purpose of limiting risks that arise in the ordinary course of business;
(9viii) the guarantee incurrence of Indebtedness of a Guarantor represented by the Company or any of the Guarantors guarantees of Indebtedness of the Company or a Restricted Subsidiary of that has been incurred in accordance with the Company that was permitted to be incurred by another provision terms of this Section 4.09Indenture; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;and
(10ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of addition to Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred permitted by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date other clause of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16paragraph) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), outstanding not to exceed $35.0 10.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Pillowtex Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, in each case, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
): (1i) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities Facilities, in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of of: (xA) $20.0 550.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay term Indebtedness under a Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction thereunder, in each case, in satisfaction of the covenant contained in Section 4.10 of this Indenture; and (yB) 5030% of the Company’s Consolidated Cash Flow for Net Tangible Assets as of the most recently ended four full fiscal quarters for which financial statements are publicly available;
date of such incurrence; (2ii) the incurrence by the Company and or any of its Restricted Subsidiaries of the Existing Indebtedness;
; (3iii) the incurrence by the Company and the Guarantors or any of its Restricted Subsidiaries of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued issued, in the case of the Notes, on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
Agreement (4and any exchange notes in respect of Additional Notes or other debt properly incurred under this Indenture, where the terms of such exchange notes are substantially identical to such other debt); (iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness under Floor Plan Facilities; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refund or discharge refinance any Indebtedness incurred pursuant to this clause (4v), not to exceed exceed, at any time outstanding, the greater of (x) $15.0 million;
30.0 million and (5y) 2.0% of Consolidated Total Assets; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2ii), (3iii), (4), (5), (8), (9), (13), (14) or (15vi) of this Section 4.09(b);
paragraph; (6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or owing to a GuarantorRestricted Subsidiary, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
and (B) (1I) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2II) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vii);
; (7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
business and not for speculative purposes; (9ix) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds in the ordinary course of business, so long as provided that such Indebtedness is covered extinguished within five Business Days;
Days of its incurrence; (12xi) the incurrence Obligations in respect of (A) performance, bid and surety bonds and completion guarantees provided by the Company or any of its Restricted Subsidiary Subsidiaries in the ordinary course of Indebtedness arising from business and (B) agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, obligations incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock subsidiary; (xii) Indebtedness arising in connection with endorsement of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary instruments for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued deposit in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
; (14xiii) the incurrence by Foreign Subsidiaries Indebtedness consisting of the Company financing of insurance premiums; (xiv) Indebtedness consisting of Guarantees incurred in the ordinary course of business for working capital purposes under repurchase agreements or similar agreements in an amount not to exceed $5.0 million at any time outstanding;
connection with the financing of sales of goods in the ordinary course of business; and (15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstandingwhich, including when taken together with all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness its Restricted Subsidiaries outstanding on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, Incurrence and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.incurred
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR" or the "INCURRENCE") any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall the Company will not permit any of its Restricted Subsidiaries to issue any shares of Disqualified Stock or preferred stock; providedPROVIDED, howeverHOWEVER, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors a Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof 4.09 will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1) the incurrence by the Company and any Guarantor of revolving credit Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownGuarantors and the Guarantors thereunder) not to exceed $200.0 million LESS the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableany Guarantor to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10;
(2) the incurrence by the Company and its Restricted Subsidiaries any Guarantor of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries Guarantor of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or such Guarantor (including any of its Restricted Subsidiariesrefinancing thereof), in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 million10.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries Guarantor of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this the Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof 4.09 or clauses clause (2), (3), (4), (5), (8), (9), (13), (14) or (155) of this Section 4.09(b)paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary of the Company, will thereof; shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of of:
(a) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding; and
(b) Currency Agreements entered into in the ordinary course of businessbusiness in respect of assets or obligations denominated in a foreign currency;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(109) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness of the Company or any Guarantor in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; PROVIDED, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued;
(10) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (10);
(11) Indebtedness of the Company or any Guarantor arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within two business days of incurrence;
(12) Indebtedness of the Company or any Guarantor represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; and
(13) the incurrence by the Company or any Guarantor of additional Indebtedness (including any refinancings thereof) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, not to exceed $25.0 million. For purposes of determining compliance with this Section 4.09. Notwithstanding any other provision , in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (13) above, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the maximum amount Company will be permitted to classify such item of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personits incurrence in any manner that complies with this Section 4.09.
Appears in 1 contract
Sources: Indenture (Wright Bilt Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that (i) the Company or any of its Restricted Subsidiaries (other than ▇▇▇▇▇▇▇ Bedding and its Restricted Subsidiaries) may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1 or (ii) ▇▇▇▇▇▇▇ Bedding and its Restricted Subsidiaries may incur indebtedness (including Acquired Debt) or issue Disqualified Stock or preferred stock, if the Fixed Charge Coverage Ratio for ▇▇▇▇▇▇▇ Bedding most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1, in each case, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and or any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities Facilities, in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $550.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries since the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of this Indenture to repay term Indebtedness under a Credit Facility or to repay revolving credit Indebtedness and effect a corresponding commitment reduction thereunder, in each case, pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Initial Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementNotes;
(4) the incurrence by the Company of the Senior Term Loan;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligationsobligations (including borrowings under a Credit Facility) or Acquired Debt, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation development, maintenance, upgrade or improvement or lease of property, plant plant, equipment or equipment assets (in each case whether through the direct purchase of assets or through the purchase of Capital Stock of the Person owning such assets) used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange forexceed, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause the greater of (16x) $10.0 million and (y), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Simmons Co)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company Holding shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and the Company that Holding shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company Holding may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock or preferred stock and the Guarantors Holding's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) and issue Disqualified Stock or issue preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s Holding's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 1.5 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The foregoing provisions of Section 4.09(a) hereof will shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under pursuant to the Credit Facilities in an Agreement; provided that the aggregate principal amount at any one time outstanding under this clause of all such Indebtedness (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or potential liability of the Company thereunder) then classified as having been incurred in reliance on this clause (i) that remains outstanding under the Credit Agreement after giving effect to such incurrence does not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater sum of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablemillion;
(2ii) the incurrence by the Company Holding and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by Holding of Indebtedness represented by the Debentures and the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementNotes;
(4iv) the incurrence by the Company Holding or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of Holding or such Restricted Subsidiary (whether through the Company direct purchase of assets or the Capital Stock of any Person owning such Assets), in an aggregate principal amount or accreted value, as applicable, not to exceed $10.0 million;
(v) the incurrence by Holding or any of its Restricted Subsidiaries of Indebtedness in connection with the acquisition of assets or a new Restricted Subsidiary; provided that such Indebtedness was incurred by the prior owner of such assets or such Restricted Subsidiary prior to such acquisition by Holding or one of its Subsidiaries and was not incurred in connection with, or in contemplation of, such acquisition by Holding or one of its Subsidiaries; provided further that the principal amount (or accreted value, in an aggregate principal amountas applicable) of such Indebtedness, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge together with any other outstanding Indebtedness incurred pursuant to this clause (4v), does not to exceed $15.0 5.0 million;
(5vi) the incurrence by the Company Holding or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b)incurred;
(6vii) the incurrence by the Company Holding or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company Holding and any of its Restricted Subsidiaries; provided, however, that:
that (Ai) if the Company or any Guarantor Holding is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Debentures and (B) (1ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Holding or a Restricted Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company Holding or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Holding or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company Holding or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging (i) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or (ii) exchange rate risk with respect to any agreement or Indebtedness of such Person payable in the ordinary course of businessa currency other than U.S. dollars;
(9ix) the guarantee Guarantee by the Company Holding or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company Holding or a Restricted Subsidiary of the Company Holding that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10x) the incurrence by the Company Holding's Unrestricted Subsidiaries of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of Holding;
(xi) Indebtedness incurred by Holding or any of its Restricted Subsidiaries of Indebtedness in constituting reimbursement obligations with respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related to letters of credit), performance, surety, appeal and other similar bonds credit issued in the ordinary course of business, including, without limitation, to letters of credit in respect to workers' compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;
(11xii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company Holding or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets asset or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
; provided that (13x) such Indebtedness is not reflected on the incurrence by the Company balance sheet of Holding or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (x)) and (y) the maximum assumable liability in respect of such Indebtedness constituting reimbursement shall at no time exceed 50% of the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any such subsequent changes in value) actually received by Holding and/or such Restricted Subsidiary in connection with such disposition;
(xiii) obligations with in respect to letters of credit issued performance and surety bonds and completion guarantees provided by Holding or any Restricted Subsidiary in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14xiv) the incurrence by Foreign Subsidiaries of the Company of Indebtedness guarantees incurred in the ordinary course of business for working capital purposes in an aggregate principal amount not to exceed $5.0 million at any time outstanding;; and
(15xv) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company Holding or any of its Restricted Subsidiaries of additional Indebtedness Indebtedness, including Attributable Debt incurred after the date of this Indenture, in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (16xv), not to exceed $35.0 20.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xv) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to Holding shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.094.09 and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. The accrual In addition, Holding may, at any time, change the classification of an item of Indebtedness (or any portion thereof) to any other clause or to the first paragraph hereof provided that Holding would be permitted to incur such item of Indebtedness (or portion thereof) pursuant to such other clause or the first paragraph hereof, as the case may be, at such time of reclassification. Accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, discount and the payment accretion of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock accreted value will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Aki Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, 1 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period, provided, further, that the amount of Indebtedness (including Acquired Debt) that may be incurred pursuant to this clause (a) by Restricted Subsidiaries that are not Guarantors of the Notes shall not exceed $10.0 million at any one time outstanding.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 million or 85% of accounts receivable plus 60% of inventory and (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available$160.0 million;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture Issue Date and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, Attributable Debt, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing financing, whether or not incurred at the time of such cost or acquisition, all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment or intellectual property rights used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) 8.0% of Consolidated Net Tangible Assets and (y) $15.0 million35.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, ; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessObligations;
(9) the guarantee Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of customers for check cashing and short term lending products in the ordinary course of business consistent with past practices;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters performance and surety bonds or similar types of credit), performance, surety, appeal and other similar bonds obligations in the ordinary course of business;
(1112) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Daysbusiness days of being incurred;
(1213) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(1314) Acquired Debt; provided that, after giving pro forma effect to the transactions that result in the incurrence by of such Acquired Debt the Company or any Restricted Subsidiary would be permitted to incur at least $1.00 of additional Indebtedness constituting reimbursement obligations with respect pursuant to letters of credit issued the Fixed Charge Coverage Ratio test set forth in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;Section 4.09(a); and
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries Guarantor of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1615), not to exceed $35.0 40.0 million. .
(c) The Company shall will not incur, and shall will not permit any Guarantor of its Restricted Subsidiaries to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor Restricted Subsidiary unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee of such Restricted Subsidiary on substantially identical terms; provided, however, that no . No Indebtedness will be deemed to be contractually treated as subordinated in right of payment or junior to any other Indebtedness of merely because it has a junior priority with respect to the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. same collateral.
(d) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1615) above of Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted permitted, in its sole discretion, to classify such item of Indebtedness Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, Disqualified Stock or Preferred Stock in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by Section 4.09(b)(1). Except as set forth above, at the time of incurrence, the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in Sections 4.09(a) and 4.09(b) in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock Preferred Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. .
(e) The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Aa) the Fair Market Value of such assets at the date of determination; and
(Bb) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Susser Holdings CORP)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and neither the Company shall not nor any Guarantor (other than Parent) will issue any Disqualified Stock and shall the Company will not permit any of its other Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Guarantor (other than the Parent and the Direct Parent) may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.5 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and or any Guarantor of additional Indebtedness and (including letters of credit credit) under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Subsidiaries thereunder) not to exceed an amount equal to the greater of (xa) $20.0 million 400.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the Issue Date to repay revolving credit Indebtedness under the Credit Facilities and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof and (yb) 5030% of Consolidated Cash Flow for ACNTA as of the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;;
(2) the incurrence by the Company and or any of its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Series A Notes, Series B Notes and any PIK Notes or PIK Payment on any series Notes and the related Note Guarantees to be issued on the date of this Indenture Issue Date and the any Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementGuarantees;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million10.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (1412) or (1513) of this Section 4.09(b) or this clause (5);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee a Guarantor is not the Company or a Guarantorobligee, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, or if a Guarantor is the obligor on such Indebtedness and neither the Company nor another Guarantor is the obligee, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the case Guarantee of the Company, or the Note Guarantee, in the case of a such Guarantor; and
(B) any (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company Company, and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessObligations;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company any Guarantor that was permitted to be incurred by another provision of this Section 4.09; provided that if ;
(9) the Indebtedness being guaranteed is subordinated incurrence by the Company or any of its Restricted Subsidiaries of obligations relating to or pari passu net gas balancing positions arising in the ordinary course of business and consistent with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedpast practice;
(10) the incurrence by the Company or any of its Restricted Unrestricted Subsidiaries of Non-Recourse Debt of an Unrestricted Subsidiary provided, however, that if any such Indebtedness in respect ceases to be Non-Recourse Debt of workers’ compensation claimsan Unrestricted Subsidiary, self-insurance obligations, bankers’ acceptances, completion guarantees such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary that is not permitted by this clause (including related letters of credit10), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from indebtedness in respect of bid, performance, surety and similar bonds issued for the honoring by a bank or account of the Company and any of its Restricted Subsidiaries in the ordinary course of business, including guarantees and obligations of the Company and any of its Restricted Subsidiaries with respect to letters of credit supporting such obligations (in each other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Daysthan an obligation for money borrowed);
(12) Indebtedness of a Restricted Subsidiary incurred and outstanding on the date on which such Restricted Subsidiary was acquired by, or merged into, the Company or any Restricted Subsidiary (other than Indebtedness Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Restricted Subsidiary is acquired by the Company, the Company would have been able to Incur $1.00 of additional Indebtedness pursuant to Section 4.09(a) after giving effect to the incurrence of such Indebtedness pursuant to this clause (12);
(13) Indebtedness (including secured Indebtedness) of the Company or any of its Restricted Subsidiaries incurred (a) to provide all or any portion of the funds utilized to consummate a transaction pursuant to which assets are acquired or another Person becomes a Restricted Subsidiary or is otherwise acquired by the Company or (b) in connection with, or in contemplation of, such acquisition; provided, however, that after giving effect to such transaction on a pro forma basis, (i) the Specified Ratios would have improved over those immediately prior to such transaction (solely for purposes of the calculation of the Fixed Charge Coverage Ratio pursuant to this clause (13), excluding from Fixed Charges any Fixed Charges relating to unsecured Indebtedness) and (ii) no Ratings Decline Event shall occur;
(14) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements agreement of the Company or such any of its Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees provided that the maximum aggregate liability in respect of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for indebtedness shall at no time exceed the purpose of financing such acquisition;
(13) the incurrence gross proceeds actually received by the Company or any and its Restricted Subsidiary of Indebtedness constituting reimbursement obligations Subsidiaries in connection with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter perioddisposition; and
(1615) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 25.0 million. The Notwithstanding the foregoing, the Company shall may not incurrefinance Funded Indebtedness requiring the Company to repurchase or repay such Funded Indebtedness upon a change of control that would not constitute a Change of Control under this Indenture, and shall not permit any Guarantor unless the indenture is amended to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness provide holders of the Company or Notes the same rights upon the occurrence of such Guarantor unless a change of control as those provided to holders of such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisFunded Indebtedness. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness (including Acquired Debt) meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1615) above of this Section 4.09, or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted to classify (or later classify or reclassify in whole or in part in its sole discretion) such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09covenant. The amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP. Indebtedness of any Person existing at the time such Person becomes a Restricted Subsidiary shall be deemed to have been incurred by the Company and the Restricted Subsidiary at the time such Person becomes a Restricted Subsidiary. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same termsterms (including, the reclassification of preferred stock as Indebtedness due to a change in accounting principleswithout limitation, any PIK Notes or PIK Payments), and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09covenant; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonCompany as accrued.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, indirectly create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”; with “incurrence” having a correlative meaning) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or and issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or and issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions . Notwithstanding the foregoing, the preceding paragraph of this Section 4.09(a) hereof will 1011 shall not prohibit the incurrence or issuance of any of the following items of Indebtedness Indebtedness, Disqualified Stock or preferred stock (collectively, “Permitted Debt”):
(1) the incurrence by the Company and or any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater sum of (xa) $20.0 150.0 million or and (yb) 507.5% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableTotal Assets of the Company, determined as of the date of the incurrence of such Indebtedness after giving pro forma effect to such incurrence and the application of the proceeds therefrom;
(2) the incurrence by the Company and its or any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date Issue Date and any Guarantees of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementNotes;
(4) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease ObligationsObligations or Attributable Debt, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation installation, improvement, deployment, refurbishment or improvement or lease modification of property, plant or equipment or furniture, fixtures and equipment, in each case, used in the business of the Company or any of its Restricted SubsidiariesSubsidiary, in an aggregate principal amountamount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to extend, renew, refund, refinance, replace, defease defease, discharge or discharge otherwise retire for value any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (a) $15.0 million50.0 million and (b) 2.5% of the Total Assets of the Company, determined as of the date of the incurrence of such Indebtedness;
(5) the incurrence or issuance by the Company or any of its Restricted Subsidiaries Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, defease defease, discharge or discharge otherwise retire for value any Indebtedness (other than intercompany Indebtedness) or Disqualified Stock of the Company, or Indebtedness (other than intercompany Indebtedness) or preferred stock of any Restricted Subsidiary, in each case that was permitted by this Indenture to be incurred or issued under the first paragraph of this Section 4.09(a) hereof 1011 or clauses clause (2), (3), (4), (5), (8), (9), (13), (1410) or (15) of this Section 4.09(bparagraph or this clause (5);
(6) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
, (Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
and (B) (1b)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries Subsidiary to the Company or to any Restricted Subsidiary of its Restricted Subsidiaries of shares of any preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the CompanySubsidiary; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the CompanySubsidiary, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by of obligations of the Company or any of its Restricted Subsidiaries of Subsidiary pursuant to Hedging Obligations Obligations, in the ordinary course of businesseach case entered into for non-speculative purposes;
(9) the guarantee by the Company or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.091011; provided that, if such Restricted Subsidiary is not a Guarantor, the Indebtedness guaranteed could have been incurred by a Restricted Subsidiary that is not a Guarantor; provided further that, if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any Guarantor of its Permitted Acquisition Indebtedness or the Incurrence by the Company or any Restricted Subsidiaries Subsidiary of Permitted Acquisition Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businessthat is Acquired Debt;
(11) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Company or such and its Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisitionSubsidiaries;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in credit; provided that, upon the ordinary course drawing of business, including, without limitation, such letters of credit to procure raw materialscredit, such obligations are reimbursed within 30 days following such drawing;
(14) the incurrence by Foreign the Company or any of its Restricted Subsidiaries of Indebtedness (A) in respect of workers’ compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, bankers’ acceptances, performance, completion and surety and appeal bonds and completion guarantees and similar obligations in the Company ordinary course of Indebtedness business, (B) in respect of performance bonds, bank guarantees or similar obligations for or in connection with pledges, deposits or payments made or given in relation to such performance bonds, bank guarantees or similar instruments in the ordinary course of business for working capital purposes in an amount not connection with or to exceed $5.0 million at any time outstanding;secure statutory, regulatory or similar obligations, and (C) arising from guarantees to suppliers, lessors, licensees, contractors, franchises or customer obligations (other than Indebtedness) incurred in the ordinary course of business; and
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for Indebtedness or the sole purpose issuance of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence Disqualified Stock by the Company or any preferred stock of its a Restricted Subsidiaries of additional Indebtedness Subsidiary in an aggregate principal amount (or accreted valueliquidation preference in the case of Disqualified Stock or preferred stock) that, when taken together with all other Indebtedness (or Disqualified Stock or preferred stock, as applicable) at any time outstandingof the Company and its Restricted Subsidiaries outstanding on the date of such incurrence and incurred pursuant to this clause (15), including all Permitted Refinancing Indebtedness incurred to extend, renew, refund, refinance, replace, defease defease, discharge or discharge otherwise retire for value any Indebtedness incurred pursuant to this clause (1615), does not to exceed the greater of (a) $35.0 million. The Company shall not incur, 150.0 million and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debtb) that is contractually subordinated in right of payment to any other Indebtedness 7.5% of the Company Total Assets of the Company, determined as of the date of the incurrence of such Indebtedness, Disqualified Stock or preferred stock, as applicable, after giving pro forma effect to such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes incurrence and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness application of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisproceeds therefrom. For purposes of determining compliance with this Section 4.091011, (a) in the event that an item of proposed Indebtedness Indebtedness, Disqualified Stock or preferred stock meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1615) above of the second paragraph of this Section 1011, or is entitled to be incurred or issued pursuant to the first paragraph of this Section 4.09(a) hereof1011, the Company will shall be permitted to divide and classify such item of Indebtedness item, in whole or in part, on the date of its incurrenceincurrence or issuance, or later divide and reclassify all or a portion of such item of Indebtednessitem, in any manner that complies with this Section 4.091011 and (b) all Indebtedness outstanding on the Issue Date or committed to on or prior to the Issue Date when borrowed, in each case, under the Credit Agreement shall be deemed incurred on the Issue Date under clause (1) of the second paragraph of this Section 1011 and may not be reclassified at any time. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, fluctuations in the termination value of Hedging Obligations and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares Disqualified Stock or preferred stock of the same class of Disqualified Stock will not shall be deemed not to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values1011. The amount of any Indebtedness outstanding as of any date will be:
shall be (1a) the accreted value of the Indebtedness, thereof in the case of any Indebtedness issued with original issue discount;
discount and (2b) the principal amount of the Indebtednessor liquidation preference thereof, in the case of any other Indebtedness; and
(3) . If obligations in respect of Indebtedness letters of another Person secured by credit are incurred pursuant to a Lien on the assets Credit Facility and are being treated as incurred pursuant to clause (1) of the specified Personsecond paragraph of this Section 1011 and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included. From and after the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount occurrence of the Indebtedness of the other PersonMerger Event, this Section 1011 shall no longer apply.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries that is not a Guarantor to issue any shares of preferred stock; provided, however, that the Company and any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), ) as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; provided further, that the amount of Indebtedness (including Acquired Debt), Disqualified Stock or preferred stock that may be incurred or issued, as applicable, by Restricted Subsidiaries that are not Guarantors, pursuant to this Section 4.09(a), shall not exceed $200.0 million at any one time outstanding.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal an amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $2.40 billion, less the greater sum of (xi) the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries to repay Indebtedness under Credit Facilities pursuant to Section 4.10 and (ii) the amount of Indebtedness in excess of $20.0 200.0 million or incurred pursuant to clause (y10) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablebelow;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and (excluding any Additional Notes), the related Note Subsidiary Guarantees to be issued on of all Notes, the date of this Indenture and the Exchange 2020 Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreementof all 2020 Notes;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment assets used in the business of the Company or any such Restricted Subsidiary, or in respect of its Restricted Subsidiariesa Sale and Leaseback Transaction, in an aggregate principal amount, including and all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million100.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses clause (2), (3), (4), (5), (8), (9), (13), (14) or (153) of above or this clause (5) or pursuant to Section 4.09(b4.09(a);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among owed to the Company and or any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness, and such Indebtedness and the payee is held by a Restricted Subsidiary that is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeSubsidiary Guarantee of such Guarantor, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any Indebtedness under Hedging Obligations entered into for bona fide hedging purposes of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Company; and
(B) any sale or other transfer of any Indebtedness to which such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7)Hedging Obligations relate;
(8) the incurrence guarantee by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant and could have been incurred (in compliance with this covenant) by the Person so guaranteeing such Indebtedness;
(9) the incurrence by any of the Company’s Foreign Subsidiaries of Indebtedness in an aggregate principal amount, including all Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (9), not to exceed (x) $100.0 million at any time outstanding plus (y) $90.0 million at any time outstanding; provided that if the any Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee under this subclause (y) shall be subordinated supported by a letter of credit incurred under one or pari passu, as applicable, more Credit Facilities pursuant to the same extent as the Indebtedness guaranteedclause (1) of this Section 4.09(b);
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businesspursuant to a Receivables Financing;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient fundsfunds in the ordinary course of business; provided, so long as however, that such Indebtedness is covered extinguished within five Business DaysDays of incurrence;
(12) the incurrence by Indebtedness of the Company or any of its Restricted Subsidiary Subsidiaries in respect of Indebtedness arising from agreements security for workers’ compensation claims, payment obligations in connection with self-insurance, performance bonds, surety bonds or similar requirements in the ordinary course of the Company or such Restricted Subsidiary providing for business;
(13) indemnification, adjustment of purchase price price, earn-out or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, business or assets of the Company or Capital Stock any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary Equity Interests for the purpose of financing or in contemplation of any such acquisition;
; provided that (13a) any amount of such obligations included on the incurrence by face of the balance sheet of the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued shall not be permitted under this clause (13) and (b) in the ordinary course case of businessa disposition, including, without limitation, letters the maximum aggregate liability in respect of credit to procure raw materials;
all such obligations outstanding under this clause (1413) shall at no time exceed the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence gross proceeds actually received by the Company or any and the Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of Subsidiaries in connection with such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter perioddisposition; and
(1614) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 200.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness .
(including Permitted Debtc) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this covenant, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, incurrence (or later reclassify all such Indebtedness in whole or a portion of such item of Indebtedness, in part) in any manner that complies with this Section 4.09covenant. The In addition, the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be treated as an incurrence of Indebtedness; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding the foregoing, any Indebtedness or an issuance of Disqualified Stock for purposes outstanding pursuant to the Credit Agreement on the date of this Section 4.09. Indenture will be deemed to have been incurred pursuant to clause (1) of the definition of “Permitted Debt.”
(d) Notwithstanding any other provision of this Section 4.09the foregoing, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur be incurred pursuant to this Section 4.09 covenant shall not be deemed to be exceeded with respect to any outstanding Indebtedness due solely as a to the result of fluctuations in the exchange rates or of currencies.
(e) For purposes of determining compliance with any U.S. dollar denominated restriction on the incurrence of Indebtedness where the Indebtedness incurred is denominated in a different currency, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of the incurrence of such Indebtedness; provided, however, that if any such Indebtedness denominated in a different currency valuesis subject to a Currency Protection Agreement with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Currency Protection Agreement. The principal amount of any Permitted Refinancing Indebtedness outstanding incurred in the same currency as the Indebtedness being refinanced will be the U.S. Dollar Equivalent of any date will be:
the Indebtedness refinanced, except to the extent that (1) the accreted value of the Indebtednesssuch U.S. Dollar Equivalent was determined based on a Currency Protection Agreement, in which case the case of any Permitted Refinancing Indebtedness issued will be determined in accordance with original issue discount;
the preceding sentence, and (2) the principal amount of the Indebtedness, in Permitted Refinancing Indebtedness exceeds the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the principal amount of the Indebtedness being refinanced, in which case the U.S. Dollar Equivalent of such excess, as appropriate, will be determined on the date such Permitted Refinancing Debt is incurred.
(f) Notwithstanding the provisions of clauses (a) through (e) of this Section 4.09, the Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated in right of payment to any other Indebtedness of the Company or of such Restricted Subsidiary, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated in the right of payment to the Notes or the Subsidiary Guarantee of such Restricted Subsidiary, to the same extent and in the same manner as such Indebtedness is subordinated in right of payment to such other PersonIndebtedness of the Company or such Restricted Subsidiary, as the case may be. For purposes of this Section 4.09(f), no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Company or any Restricted Subsidiary solely by virtue of being unsecured or secured by a junior priority Lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them, including intercreditor agreements that contain customary provisions requiring turnover by holders of junior prior liens of proceeds of collateral in the event that the security interests in favor of the holders of the senior priority in such intended collateral are not perfected or invalidated and similar customary provisions protecting the holders of senior priority liens.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockDisqualified Stock and any Foreign Subsidiary may incur Indebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of Disqualified Stock, as set forth below (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under the Credit Facilities Agreement in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown4.09(b)(i) not to exceed $1,350.0 million, less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% of Consolidated Cash Flow for any Restricted Subsidiary to repay any Indebtedness under the most recently ended four full fiscal quarters for which financial statements are publicly availableCredit Agreement and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, pursuant to Section 4.10;
(2ii) the incurrence by the Company and its any Restricted Subsidiaries Subsidiary of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture hereof and the any Guarantees thereof by any Guarantor (and any Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementthereof);
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (44.09(b)(iv), not to exceed the greater of (i) $15.0 million100.0 million and (ii) 5.0% of Consolidated Tangible Assets, at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2ii), (3), (4), (5), (8), (9), (13), (14iii) or (15v) of this Section 4.09(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiary; provided, however, that:
(A1) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B2) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Subsidiary; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Hedging Obligations that are incurred for the purpose of fixing, hedging or swapping interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or for hedging foreign currency exchange risk, in each case to the extent the Hedging Obligations are incurred in the ordinary course of businessthe Company’s financial management and not for any speculative purpose;
(9viii) the guarantee Guarantee by the Company or any of the Guarantors Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision ; provided, in each such case, that the amount thereof is included in Fixed Charges of this Section 4.09, the maximum amount of Indebtedness that Company as accrued;
(x) the incurrence by the Company or any Restricted Subsidiary may incur of Indebtedness, including Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, incurred in respect of workers’ compensation claims, self-insurance obligations, performance, proposal, completion, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; provided that the underlying obligation to perform is that of the Company or its Restricted Subsidiaries and not that of the Company’s Unrestricted Subsidiaries; and provided further, that such underlying obligation is not in respect of borrowed money;
(xi) the incurrence by the Company or any Restricted Subsidiary of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this Section 4.09 shall clause (xi), not be deemed to be exceeded solely as exceed $125.0 million;
(xii) the incurrence by the Company or any Restricted Subsidiary of Indebtedness, including but not limited to Indebtedness represented by letters of credit for the account of the Company or any Restricted Subsidiary, arising from agreements of the Company or a result Restricted Subsidiary providing for indemnification, adjustment of fluctuations purchase price or similar obligations, in exchange rates each case, incurred or currency values. The amount assumed in connection with the disposition of any business, assets or Equity Interests of the Company or a Restricted Subsidiary, other than guarantees of Indebtedness outstanding as incurred by any Person acquiring all or any portion of any date will be:such business, assets or Equity Interests for the purpose of financing such acquisition;
(1xiii) the accreted value incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from the Indebtednesshonoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of any daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness issued with original issue discountis extinguished within five Business Days of incurrence;
(2xiv) the issuance of preferred stock of a Restricted Subsidiary to the Company that is pledged to secure the Credit Agreement, provided that any subsequent transfer that results in such preferred stock being held by a Person other than the Company or a Restricted Subsidiary will be deemed to constitute an issuance of preferred stock not permitted by this clause (xiv);
(xv) the incurrence of Acquired Debt (but not any Indebtedness incurred in connection with, or in contemplation of such other Person merging with or into, or becoming a Subsidiary of, the Company); provided, however, that on the date such Person becomes a Subsidiary or is acquired by the Company and after giving pro forma effect thereto, (x) the Company would have been entitled to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio in Section 4.09(a) or (y) the Fixed Charge Coverage Ratio would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and
(xvi) Guarantees by the Company or any Restricted Subsidiary of Indebtedness of any Unrestricted Subsidiary, provided that the aggregate principal amount of such Guarantees of Indebtedness of any Unrestricted Subsidiary shall not exceed $50.0 million at any time outstanding.
(c) For purposes of determining compliance with any restriction on the incurrence of Indebtedness where the Indebtedness incurred is not denominated in U.S. dollars, the amount of such Indebtedness will be the U.S. Dollar Equivalent determined on the date of incurrence of such Indebtedness; provided, however, that if any such Indebtedness not denominated in U.S. dollars is subject to a Hedging Obligation with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Hedging Obligation. The principal amount of any Permitted Refinancing Indebtedness incurred in the same currency as the Indebtedness being refinanced will be the U.S. Dollar Equivalent of the Indebtedness refinanced, except to the extent that (i) such U.S. Dollar Equivalent was determined based on a Hedging Obligation, in which case the Permitted Refinancing Indebtedness shall be determined in accordance with the preceding sentence, and (ii) the principal amount of the Indebtedness, in Permitted Refinancing Indebtedness exceeds the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the principal amount of the Indebtedness being refinanced, in which case the U.S. Dollar Equivalent of such excess shall be determined on the date such Permitted Refinancing Indebtedness is Incurred.
(d) For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xvi) of Section 4.09(b), or is entitled to be incurred pursuant to Section 4.09(a), the Company shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided in Section 4.09(b)(i).
(e) The Company shall not, and shall not permit any Guarantor to, incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other PersonIndebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes or such Note Guarantee on substantially identical terms; provided, however, that no Indebtedness of the Company or any Guarantor will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or any Guarantor solely by virtue of being unsecured or by virtue of the fact that the holders of secured Indebtedness have entered into intercreditor arrangements giving one or more of such holders priority over the other holders in the collateral held by them.
Appears in 1 contract
Sources: Execution Version (Geo Group Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11 for any incurrence on or prior to November 15, 2002 and 2.5 to 1 any time thereafter, in each case, determined on a pro forma basis (including a pro forma application of the net 43 50 proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof will this covenant shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1a) the incurrence by the Company and any Guarantor of its Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with a)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Subsidiaries thereunder) not to exceed the greater of (x1) $20.0 million 2.2 billion and (2) the Borrowing Base less the aggregate amount of all repayments, optional or (y) 50% mandatory, of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableprincipal of any term Indebtedness under a Credit Facility that have been made by the Company or any of its Subsidiaries since the date of this Indenture and less the aggregate amount of all commitment reductions with respect to any revolving credit borrowings under a Credit Facility that have been made by the Company or any of its Subsidiaries since the date of this Indenture;
(2b) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3c) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementregistration rights agreement;
(4d) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiariessuch Subsidiary or in a Permitted Business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4d), not to exceed $15.0 million25.0 million at any time outstanding;
(5e) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2b), (3c), (4d), (5e), (8), (9), (13), (14j) or (15l) of this Section 4.09(b)paragraph;
(6f) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will ; shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6f);; 44 51
(7g) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(9h) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(10i) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued;
(j) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (j);
(k) Indebtedness in respect of performance and surety bonds, terminable guarantees and completion guarantees or other similar forms of Indebtedness provided by the Company or a Restricted Subsidiary in the ordinary course of business; and
(l) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16l), not to exceed $35.0 100.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisunsecured. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1a) through (16l) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this covenant, the Company will shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09covenant. The accrual of interest, Indebtedness under Credit Facilities outstanding on the accretion or amortization of original issue discount, the payment of interest date on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, which Notes are first issued and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not authenticated under this Indenture shall be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, have been incurred on such date in reliance on the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
exception provided by clause (1a) the accreted value of the Indebtedness, in the case definition of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonPermitted Debt.
Appears in 1 contract
Sources: Indenture (Hercules Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.5 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $150.0 million less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries since the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture (which, for the avoidance of doubt, excludes any Additional Notes) and the Exchange Notes and the related Note Guarantees to be issued pursuant to in exchange therefor in accordance with the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or installation, improvement or lease of propertyproperty (real or personal), plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million5.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) 4.09 hereof or clauses (2), (3), (4), (5), (8), (9), (13), (1410) or (1516) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1x) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2y) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations provided that such Hedging Obligations are entered into, in the ordinary course reasonable judgment of businessthe Company, to protect the Company and its Restricted Subsidiaries from fluctuations in the applicable rates and not for purposes of speculation;
(9) the incurrence by the Company of the Senior Subordinated Convertible Notes in an aggregate principal amount not to exceed $150.0 million;
(10) the incurrence by a Restricted Subsidiary of the Company of Acquired Debt that was outstanding on the date that such Restricted Subsidiary was acquired, directly or indirectly, by the Company; provided that (a) such Restricted Subsidiary incurred such Indebtedness prior to the date that the Company directly or indirectly acquired such Restricted Subsidiary, (b) such Indebtedness was not incurred in connection with, or in contemplation of, such acquisition and (c) the Company’s Fixed Charge Coverage Ratio immediately following such acquisition and incurrence would be not less than the Company’s Fixed Charge Coverage Ratio immediately prior to such acquisition and incurrence;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, “earn out,” stock-price guarantee or similar obligations, in each case, incurred in connection with the acquisition or disposition of any Permitted Business, assets used or useful in a Permitted Business or a Restricted Subsidiary of the Company in accordance with the terms of this Indenture, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such Permitted Business, assets or Restricted Subsidiary for the purposes of financing such acquisition; provided that, with respect to any such disposition, the maximum aggregate liability in respect of all such Indebtedness will at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(12) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(1013) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and other similar surety bonds in the ordinary course of businessbusiness or as required from time to time by law or state licensing or regulatory authorities;
(1114) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary Guarantor of Second Lien Debt for unsecured Indebtedness evidenced by promissory notes that are subordinated in right of payment to the sole purpose of repurchasingNotes issued to current, redeeming future or otherwise acquiring former directors, officers, employees or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application consultants of the net proceeds therefrom), as if Company or any of its Restricted Subsidiaries (or their respective spouses) in lieu of cash payments for Equity Interests being repurchased from such incurrence had occurred at the beginning of such four-quarter periodPerson; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of additional Indebtedness Indebtedness, the issuance by any the Company of Disqualified Stock or the issuance by a Guarantor of Preferred Stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 25.0 million. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Fti Consulting Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall Company
(1) will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired DebtIndebtedness);
(2) will not and will not permit any of its Restricted Subsidiaries to, and the Company shall not issue any shares of Disqualified Stock and shall Stock; and
(3) will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, provided that the Company or any Restricted Subsidiary may incur Indebtedness (Indebtedness, including Acquired Debt) Indebtedness, or issue shares of Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, Stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such that additional Indebtedness is incurred or such that Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.1 to 1, determined on a consolidated pro forma basis (basis, including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such that four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”Indebtedness"):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an Facilities; provided that the aggregate principal amount at any one time outstanding under this clause of all Indebtedness (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and those Restricted Subsidiaries thereunder) then classified as having been incurred in reliance upon this clause (1) that remains outstanding under such Credit Facilities after giving effect to that incurrence does not exceed an amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not equal to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available665.0 million;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on incurrence by ▇▇▇▇▇▇▇ Group, Inc. of the date of this Indenture and the Exchange Secured Notes and the related Note Guarantees to be issued pursuant to Subordinated Notes and the Registration Rights Agreementguarantees thereof by its Restricted Subsidiaries;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings Obligations or purchase money other obligations, in each case, incurred the proceeds of which are used solely for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment (including acquisitions of Capital Stock of a Person that becomes a Restricted Subsidiary to the extent of the Fair Market Value of the property, plant or equipment so acquired) used in the business of the Company or any of its that Restricted SubsidiariesSubsidiary, in an aggregate principal amountamount (or accreted value, as applicable), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge any replace such Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million40.0 million outstanding after giving effect to that incurrence;
(5) Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing that acquisition; provided that:
(a) that Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on that balance sheet for purposes of this clause (a)); and
(b) in the case of a disposition, the maximum assumable liability in respect of that Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the Fair Market Value of those non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and/or that Restricted Subsidiary in connection with that disposition;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted is then classified as having been incurred pursuant to paragraph (a) of this Section 4.09 or by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (56), (8), (9), (13), (1410) or (1512) of this paragraph (b) of Section 4.09(b)4.09;
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and and/or any of its Restricted Subsidiaries; provided, however, provided that:
(Aa) if the Company or any Guarantor is the obligor on such that Indebtedness, that Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and thereof and
(2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such that Indebtedness by the Company or such that Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging;
(a) interest rate risk with respect to any Indebtedness that is permitted by the terms of this indenture to be outstanding; or
(b) exchange rate risk of that Person; provided that those agreements do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in the ordinary course foreign currency exchange rates or interest rates or by reason of businessfees, indemnities and compensation payable thereunder;
(9) the guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness Acquired Indebtedness; provided that the Company would have a higher Fixed Charge Coverage Ratio immediately after giving pro forma effect to such incurrence than the Fixed Charge Coverage Ratio immediately prior to such incurrence;
(11) obligations in respect of workers’ compensation claimstrade letters of credit, self-insurance obligations, bankers’ acceptances, performance and surety bonds and completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence provided by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(1612) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstandingoutstanding after giving effect to that incurrence, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1612), not to exceed $35.0 20.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), ) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and any of the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Company's Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.00 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1i) the incurrence by the Company and any Guarantor or its Restricted Subsidiaries of term Indebtedness and under the Credit Facility, letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and its Restricted Subsidiaries thereunder) and related Guarantees under the Credit Facility; PROVIDED that the aggregate principal amount thereunder whether of all term Indebtedness and letters of credit of the Company and its Restricted Subsidiaries (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) outstanding under the Credit Facility after giving effect to such incurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (i) does not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not exceed an amount equal to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available550.0 million;
(2ii) the incurrence by the Company or its Restricted Subsidiaries of revolving credit Indebtedness under the Credit Facility, letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) and related Guarantees under the Credit Facility; PROVIDED that the aggregate principal amount of all revolving Indebtedness and letters of credit of the Company and its Restricted Subsidiaries (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) outstanding under the Credit Facility after giving effect to such incurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (ii), does not exceed $700.0 million less the aggregate amount of Asset Sale proceeds applied by the Company and its Restricted Subsidiaries to permanently reduce the availability of revolving credit Indebtedness under the Credit Agreements pursuant to the provisions of Section 4.10 hereof;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iv) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes Senior Notes, the Senior Subordinated Notes, the Senior Subsidiary Guarantees and the related Subordinated Subsidiary Guarantees limited in aggregate principal amount, without duplication, to amounts outstanding under this Senior Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Senior Subordinated Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture as of their respective dates;
(4v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness incurred pursuant to this clause (4v), not to exceed $15.0 million5% of Total Assets;
(5vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6vii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; providedPROVIDED, howeverHOWEVER, that:
that (Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the NotesSenior Note and this Senior Note Indenture, in the case (ii) if a Restricted Subsidiary of the CompanyCompany is the obligor on such Indebtedness, or such Indebtedness is expressly subordinated to the Note Guarantee, prior payment in the case full in cash of a Guarantor; and
such Restricted Subsidiary's Senior Subsidiary Guarantee and (B) (1iii)(A) any subsequent event or issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vii);
(7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the normal course of business for the purpose of fixing or hedging currency, commodity or interest rate risk (including with respect to any Indebtedness that is permitted by the terms of this Senior Note Indenture to be outstanding in connection with the conduct of their respective businesses and not for speculative purposes);
(ix) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in the ordinary course of businessbusiness solely in respect of performance, surety and similar bonds, completion or performance guarantees or standby letters of credit issued for the purpose of supporting workers' compensation liabilities of the Company or any of its Restricted Subsidiaries, to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money to others;
(9x) the incurrence of Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary;
(xi) the incurrence by a Restricted Subsidiary of the Company of Indebtedness in connection with and in contemplation of, the concurrent disposition of such Restricted Subsidiary to the stockholders of the Company; PROVIDED that such disposition occurs concurrently with such incurrence and following such disposition, neither the Company nor any of its Restricted Subsidiaries has any liability with respect to such Indebtedness;
(xii) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is Non-Recourse Debt with respect to the Company and its other Restricted Subsidiaries (except for Standard Securitization Undertakings and Limited Originator Recourse);
(xiii) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16xiv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (16xiv), not to exceed $35.0 75.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xiv) above as of the date of incurrence thereof or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09 as of the date of incurrence thereof, the Company will be permitted to shall, in its sole discretion, classify or reclassify such item of Indebtedness on as of the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, incurrence thereof in any manner that complies with this Section 4.09 and such item of Indebtedness shall be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph of this Section 4.09. The accrual Accrual of interest, the accretion or amortization of original issue discount, accreted value and the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Senior Note Indenture (Ball Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), ) and the Company shall not, and shall not permit any Guarantor to, issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; providedPROVIDED, howeverHOWEVER, that the Company or any Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.25 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED DEBT"):
(1i) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $125.0 million, LESS the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableits Restricted Subsidiaries to repay any Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10;
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries that is a Guarantor of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 million10.0 million at any time outstanding;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof 4.09 or clauses (2ii), (3), (4), (5), (8), (9), (13), (14iii) or (15iv) of this Section 4.09(b)paragraph;
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries Guarantor of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesGuarantor; providedPROVIDED, howeverHOWEVER, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company Guarantor and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Guarantor; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted SubsidiaryGuarantor, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares Guarantor of preferred stockstock solely to or among the Company and any Guarantor; providedPROVIDED, howeverHOWEVER, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the CompanyGuarantor; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, Guarantor will be deemed, in each case, to constitute an issuance of such preferred stock by the Company or such Restricted Subsidiary Guarantor, as the case may be, that was not permitted by this clause (7vii);
(8) viii) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessObligations;
(9ix) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of Guarantor; PROVIDED that the Company that underlying Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16x) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16x), not to exceed $35.0 million. The Company shall not incur, and shall not permit 25.0 million at any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basistime outstanding. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16x) above above, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09 and such item of Indebtedness shall be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph of this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; PROVIDED, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the The maximum amount of Indebtedness that the Company or any one of its Restricted Subsidiary Subsidiaries may incur pursuant to this Section 4.09 shall not be deemed to be exceeded exceeded, with respect to any outstanding Indebtedness, due solely as a result of to fluctuations in currency exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personrates.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”"INCUR") any Indebtedness (including Acquired Debt), ) and that the Company Borrower shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s Borrower's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock incurred, or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.7 shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”"PERMITTED INDEBTEDNESS"):
(1i) the incurrence by the Company and any Guarantor Borrower of additional Indebtedness and letters of credit under Credit Facilities (and the guarantee thereof by the Guarantors) in an aggregate principal amount outstanding pursuant to this clause (i) at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether potential liability of the Borrower and its Restricted Subsidiaries thereunder), including all Permitted Refinancing Indebtedness then outstanding incurred to refund, refinance or not drawn and revolving credit facilities measured at entry of such facilityreplace any other Indebtedness incurred pursuant to this clause (i), not at the date of drawdown) not to exceed $375.0 million less the greater aggregate amount of (x) $20.0 million or (y) 50% all Net Proceeds of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableAsset Sales applied since December 11, 1998 to repay any such Indebtedness pursuant to Section 4.8;
(2ii) the incurrence by the Company Borrower and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by the Company Borrower and the Guarantors of Indebtedness represented by $500.0 million in aggregate principal amount of the Notes Bridge Loans and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementthereof;
(4iv) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company Borrower or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness then outstanding incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (4iv), not to exceed $15.0 million30.0 million at any time outstanding;
(5v) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of Indebtedness in connection with the acquisition of assets or a new Restricted Subsidiary; provided that such Indebtedness was incurred by the prior owner of such assets or such Restricted Subsidiary prior to such acquisition by the Borrower or one of its Restricted Subsidiaries and was not incurred in connection with, or in contemplation of, such acquisition by the Borrower or one of its Restricted Subsidiaries; and provided further that the principal amount (or accreted value, as applicable) of such Indebtedness, together with any other outstanding Indebtedness incurred pursuant to this clause (v), does not exceed $10.0 million;
(vi) the incurrence by the Borrower or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture Agreement to be incurred under Section 4.09(a(other than intercompany Indebtedness or Indebtedness incurred pursuant to clause (i) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(babove);
(6vii) the incurrence Indebtedness incurred by the Company Borrower or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of intercompany credit issued in the ordinary course of business in respect of workers' compensation claims or self-insurance, or other Indebtedness between or among the Company and any of its Restricted Subsidiarieswith respect to reimbursement-type obligations regarding workers' compensation claims; provided, however, that:
(A) if that upon the Company or any Guarantor is the obligor on drawing of such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash letters of all Obligations then due with respect to the Notes, in the case of the Company, credit or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Indebtedness, such obligations are reimbursed within 30 days following such drawing or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6)incurrence;
(7viii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company Borrower or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds, including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value), actually received by the Borrower and its Restricted Subsidiaries in connection with such disposition;
(13ix) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Borrower and any of its Restricted Subsidiaries; provided, however, that (A) if the Borrower is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Bridge Loans and (B)(1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Borrower or one of its Restricted Subsidiaries and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Borrower or one of its Restricted Subsidiaries shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Borrower or such Restricted Subsidiary, as the case may be;
(x) the incurrence by the Borrower or any of the Guarantors of Hedging Obligations that are incurred for the purpose of (A) fixing, hedging or capping interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Agreement to be outstanding or (B) protecting the Borrower and its Restricted Subsidiaries against changes in currency exchange rates;
(xi) the guarantee by the Borrower or any of the Guarantors of Indebtedness of the Borrower or a Restricted Subsidiary of the Borrower that was permitted to be incurred by another provision of this Section 4.7;
(xii) the incurrence by the Borrower's Unrestricted Subsidiaries of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower that was not permitted by this clause (xii), and the issuance of preferred stock by Unrestricted Subsidiaries;
(xiii) obligations in respect of performance and surety bonds and completion guarantees provided by the Borrower or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued Subsidiaries in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;; and
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15xiv) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company Borrower or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness then outstanding incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (16xiv), not to exceed $35.0 50.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.094.7, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt Indebtedness described in clauses (1i) through (16xiv) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.7, the Company will be permitted to classify Borrower shall, in its sole discretion, classify, or later reclassify, such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09covenant. The accrual Accrual of interest, the accretion or amortization of original issue discount, accreted value and the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person4.7.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors a Guarantor may incur Indebtedness (including Acquired Debt, in each case if (i) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters (taken as one accounting period) for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds Net Proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
period and (bii) no Default or Event of Default has occurred and is continuing or would occur as a consequence thereof; The foregoing provisions of Section 4.09(a) hereof will shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor and/or its Subsidiaries of Indebtedness and letters of credit under the New Credit Facilities Facility in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Subsidiaries thereunder) not to exceed the greater of (x) $20.0 100.0 million or and (y) 50the sum of 85% of Consolidated Cash Flow for Eligible Receivables and 60% of Eligible Inventory, less in each case the most recently ended four full fiscal quarters for which financial statements are publicly availableaggregate amount of all Net Proceeds of Asset Sales applied to permanently reduce the outstanding amount of such Indebtedness and the lending commitments with respect thereto pursuant to Section 4.10;
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on incurrence by the date Guarantors of this Indenture and Indebtedness represented by the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementSubsidiary Guarantees;
(4iii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease ObligationsObligations (whether or not incurred pursuant to sale and leaseback transactions), mortgage financings financing or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiariessuch Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed $15.0 million5.0 million at any time outstanding;
(5iv) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b)Debt;
(6v) the incurrence by the Company or any of its Restricted Wholly- Owned Subsidiaries (other than a Receivables Subsidiary) of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesWholly-Owned Subsidiaries (other than a Receivables Subsidiary) or between or among any of the Company's Wholly-Owned Subsidiaries (other than a Receivables Subsidiary); provided, however, that:
that (Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is unsecured and expressly subordinated subordinate to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; andNotes and (b)
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Wholly-Owned Subsidiary of the Company (other than a Receivables Subsidiary) and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Wholly-Owned Subsidiary of the Company, will (other than a Receivables Subsidiary) shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10vi) the incurrence by the Company of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businessthis Indenture to be incurred;
(11vii) Indebtedness of a Receivables Subsidiary that is not recourse to the Company or any other Subsidiary of the Company (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction; and
(viii) the incurrence by the Company or any of and its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such (in addition to Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred permitted by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date other clause of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16paragraph) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), outstanding not to exceed $35.0 10.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Restricted Subsidiary of the Guarantors Company may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.00 to 11.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred or issued, as applicable, under this subsection (a) by Restricted Subsidiaries that are not Guarantors shall not exceed at any time outstanding the greater of (x) $50.0 million and (y) 5.0% of Total Assets as of the date of such incurrence.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount (excluding the amount of any Hedging Obligations and banking service, treasury management and other similar Obligations) at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of of: (x) $20.0 450.0 million or and (y) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base as of the date of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing IndebtednessIndebtedness outstanding on the date of this Indenture (other than Indebtedness under the Credit Agreement);
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementAgreement (and any Exchange Notes issued in exchange for Additional Notes properly incurred under this Indenture, where the terms of such Exchange Notes are substantially identical to such Additional Notes);
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an provided that the aggregate principal amountamount of any such incurrence does not cause the aggregate principal amount of Indebtedness then outstanding under this clause (4), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (x) $15.0 million75.0 million and (y) 7.5% of Total Assets as of the date of any such incurrence;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (914), (13), (14) or (1519) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the such Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, suretycompletion and surety bonds and completion, appeal performance and other similar bonds guarantees in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect to banking service, treasury management and other similar Obligations (including without limitation Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient fundsfunds or in respect of netting services, overdraft protection and otherwise in connection with deposit accounts, so long as such Indebtedness is covered within five Business Days);
(12) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate principal amount at any time outstanding pursuant to this clause (12), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (12), not to exceed the greater of (x) $50.0 million (or the equivalent thereof, measured at the time of each incurrence, in applicable foreign currency) and (y) 5.0% of Total Assets as of the date of any such incurrence;
(13) the incurrence of Indebtedness arising from any agreement entered into by the Company or any of its Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price adjustment or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, business or assets of the Company or any of its Restricted Subsidiaries or Capital Stock of a Subsidiary, other than guarantees any of its Restricted Subsidiaries; provided that the maximum aggregate liability in respect of all such Indebtedness incurred pursuant to this clause (13) shall at no time exceed the gross proceeds actually received by any Person acquiring all the Company and its Restricted Subsidiaries in connection with such acquisitions or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisitiondispositions;
(1314) the incurrence of Permitted Acquisition Debt;
(15) the incurrence of Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(16) the incurrence of Indebtedness consisting of take-or-pay obligations contained in supply agreements relating to products, services or commodities of a type that the Company or any of its Subsidiaries uses or sells in the ordinary course of business;
(17) the incurrence of Indebtedness consisting of the financing of insurance premiums;
(18) the incurrence of Indebtedness consisting of Guarantees incurred in the ordinary course of business under repurchase agreements or similar agreements in connection with the financing of sales of goods in the ordinary course of business; and
(19) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1619), not to exceed the greater of (x) $35.0 million75.0 million and (y) 7.5% of Total Assets as of the date of any such incurrence. The Company shall will not incur, and shall the Company will not permit any Guarantor to incurto, directly or indirectly, incur any Indebtedness (including Permitted Acquired Debt) that is contractually subordinated or junior in right of payment to any other Indebtedness of the Company or such Guarantor Guarantor, as the case may be, unless such Indebtedness is also contractually expressly subordinated in right of payment to the Notes and the applicable or such Guarantor’s Note Guarantee on substantially identical termsto the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Company or such Guarantor, as the case may be; provided, however, that no (1) unsecured Indebtedness will not be deemed or treated as subordinated or junior to secured Indebtedness merely because it is unsecured or is secured by different collateral or (2) Senior Debt will not be contractually deemed or treated as subordinated in right of payment or junior to any other Indebtedness of Senior Debt merely because it has a junior priority with respect to the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basissame collateral. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1619) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness permitted by this Section 4.09 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 4.09 permitting such Indebtedness. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, the payment of fees and premiums and additional payments with respect to Indebtedness, the realization of any Permitted Lien, a change in GAAP or an interpretation thereunder that results in an obligation of such Person that exists at such time becoming Indebtedness, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual of interest, accretion or amortization of original issue discount or payment of interest is included in Fixed Charges of the Company as accrued, accreted or paid, as the case may be. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness incurred pursuant to this Section 4.09, any other obligation of the obligor on such Indebtedness (or of any other Person that could have incurred such Indebtedness under this Section 4.09) arising under any Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness. The amount of any Indebtedness outstanding as of any date will be:
(1a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2b) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3c) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(Ai) the Fair Market Value of such assets at the date of determination; andor
(Bii) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Park Ohio Holdings Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors Company's Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters (excluding any fiscal quarters ended prior to July 1, 1997) for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof 4.09 will not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face stated amount thereunder whether or thereof) and other obligations under Credit Facilities in an aggregate principal amount that does not drawn and revolving credit facilities measured exceed at entry any one time $115.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied to repay Indebtedness under such Credit Facilities pursuant to Section 4.10 hereof (other than temporary paydowns pending final application of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableNet Proceeds);
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3ii) the incurrence by the Company and the Guarantors of the Existing Indebtedness and the issuance of the Existing Disqualified Stock;
(iii) the incurrence by the Company of Indebtedness represented by the Notes and the related Note Guarantees in an aggregate principal amount not to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementexceed $120.0 million;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiariessuch Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (4iv), that does not to exceed at any one time the amount of such Capital Lease Obligations, mortgage financings or purchase money obligations outstanding as of the date of this Indenture, plus $15.0 5.0 million;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was is permitted by this Indenture to be incurred under Section 4.09(a) the first paragraph hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14ii) or (15iv) of this Section 4.09(b)paragraph;
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesGuarantor; provided, however, that:
that (Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
Notes and (B) (1ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company Guarantor and (2B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Guarantor thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted SubsidiaryGuarantor, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries the Guarantors of Hedging Obligations in that are incurred for the ordinary course purpose of businessfixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(9viii) the guarantee by the Company or any of its Subsidiaries or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company another Guarantor that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10ix) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (ix), and the issuance of preferred stock by Unrestricted Subsidiaries; and
(x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16x), not to exceed $35.0 5.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16x) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual Accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, Company as accrued (to the extent not already included in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonFixed Charges).
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Restricted Subsidiary may incur Indebtedness (including Acquired DebtDebt and, in the case of a Restricted Subsidiary, the issuance of preferred stock) or and the Company may issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof this covenant will not prohibit the incurrence of any of the following items of Indebtedness or issuances of Disqualified Stock or preferred stock, as applicable (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Subsidiaries thereunder) not to exceed the greater of (xa) $20.0 250.0 million or and (yb) 5025.0% of the Company’s Consolidated Cash Flow for Net Tangible Assets, determined at the most recently ended four full fiscal quarters for which financial statements are publicly availabletime of incurrence;
(2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes issued on the Issue Date and the related Note Guarantees to be issued on the date of this Indenture Subsidiary Guarantees, and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreementregistration rights agreement;
(4iv) the incurrence by the Company or and any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction, design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4iv), not to exceed at any time outstanding the greater of (a) $15.0 million50.0 million and (b) 5.0% of the Company’s Consolidated Net Tangible Assets, determined at the time of incurrence on a pro forma basis to give effect to the assets purchased, constructed, installed or improved;
(5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replacedefease, defease discharge or discharge any replace Indebtedness (other than intercompany Indebtedness) or preferred stock of any Restricted Subsidiary, in each case that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2ii), (3iii), (4iv), (5v), (8), (9xiii), (13), (14xiv) or (15xviii) of this Section 4.09(b)paragraph;
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, provided that:
: (Aa) if the Company or any Guarantor is the obligor on any such Indebtedness and the payee that is owing to a Restricted Subsidiary that is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
and (Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such a Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business and not for speculative purposes;
(viii) the Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or any Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness that is being Guaranteed is subordinated in right of payment to the Notes or a Subsidiary Guarantee, then the Guarantee of that Indebtedness by the Company or the Guarantor shall be subordinated in right of payment to the Notes or the Guarantor’s Subsidiary Guarantee, as the case may be;
(ix) the incurrence by the Company’s Unrestricted Subsidiaries of Non-Recourse Debt; provided that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (ix);
(x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, public liability insurance, unemployment insurance, property, casualty or liability insurance, self-insurance obligations, bankers’ acceptances, or customs, completion, advance payment, performance, bid performance, appeal or surety bonds and other similar obligations in the ordinary course of business, including guarantees or obligations with respect to letters of credit supporting the foregoing;
(xi) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of incurrence;
(xii) Indebtedness represented by agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earn outs or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Capital Stock of the Company or any Restricted Subsidiary; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(xiii) Indebtedness of a Restricted Subsidiary incurred and outstanding on the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness incurred in connection with, or in contemplation of, such acquisition); provided that at the time such Restricted Subsidiary is acquired by the Company, the Company would have been able to incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the incurrence of such Indebtedness pursuant to this clause (xiii);
(xiv) Indebtedness of Foreign Subsidiaries in an aggregate amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance or replace any Indebtedness incurred pursuant to this clause (xiv), not to exceed 15% of the aggregate Consolidated Net Tangible Assets of all Foreign Subsidiaries, determined at the time of incurrence;
(xv) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
: (Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
thereof and (Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Companythereof, will be deemed, in each case, to constitute an issuance of such preferred stock (as of the date of such sale or transfer) by such Restricted Subsidiary that was not permitted by this clause (7xv);
(8) the incurrence by xvi) Indebtedness of the Company or any of its Restricted Subsidiaries consisting of Hedging Obligations (a) the financing of insurance premiums or (b) take-or-pay obligations contained in the ordinary course of businesssupply arrangements;
(9xvii) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter periodTreasury Management Arrangements; and
(16xviii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16xviii), in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $35.0 million. The Company shall not incur, 75.0 million and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debtb) that is contractually subordinated in right of payment to any other Indebtedness 5.0% of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right Company’s Consolidated Net Tangible Assets determined at the time of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basisincurrence. For purposes of determining compliance with this Section 4.09, in the event that if an item of proposed Indebtedness (including Acquired Debt) at any time meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xviii) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09(a) hereof4.09, the Company will be permitted to classify (and later reclassify) in whole or in part, in its sole discretion such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Debt. The accrual of interestinterest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Further, the reclassification of any lease or other liability of the Company or any of its Restricted Subsidiaries as Indebtedness due to a change in accounting principles after the Issue Date will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in the same foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, the U.S. dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of the refinancing Indebtedness does not exceed the principal amount of the Indebtedness being refinanced. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall covenant will not be deemed to be exceeded solely as a result of fluctuations in the exchange rates or currency values. The amount rate of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personcurrencies.
Appears in 1 contract
Sources: Indenture (Parker Drilling Co /De/)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, :
(1) that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors Issuer and any other Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or and issue preferred stockPreferred Stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock Preferred Stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, in each case, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock Preferred Stock had been issued, as the case may be, at the beginning of such four-four quarter period; and
(2) if the Indebtedness to be incurred is Senior Secured Indebtedness, the Issuer and any Restricted Subsidiary may incur such Senior Secured Indebtedness if the Consolidated Senior Secured Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred is less than 4.75 to 1.0 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the Indebtedness had been incurred at the beginning of such four quarter period. Restricted Subsidiaries that are not Guarantors may only incur Indebtedness pursuant to this paragraph if on a pro forma basis (including a pro forma application of the net proceeds therefrom), the aggregate amount of Indebtedness of Restricted Subsidiaries that are not Guarantors incurred pursuant to this paragraph would not exceed £10 million.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown1) not to exceed the greater of (x) $20.0 £100 million or (y) 50and 14.2% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableCompany’s Total Assets, plus in the case of any refinancing of any Indebtedness permitted under this clause (1) or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing;
(2) Indebtedness outstanding on the incurrence by the Company and its Restricted Subsidiaries of the Existing IndebtednessIssue Date;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Second Lien Notes, guarantees of the Second Lien Notes, the Senior Secured Notes (other than Additional Senior Secured Notes), and the related Note Senior Secured Notes Guarantees to be issued on the date of this Indenture and the Exchange (including any future Senior Secured Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementGuarantees);
(4) the incurrence by the Company or any Restricted Subsidiary of its Restricted Subsidiaries of (A) Indebtedness represented by representing Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, obligations incurred for the purpose of financing all or any part of the purchase price price, lease expense, rental payments or cost of design, construction, installation or improvement or lease of property, plant or equipment or other assets (including Capital Stock) used in the business of the Company or any of its Restricted Subsidiaries, (B) Indebtedness otherwise incurred to finance the purchase, lease, rental or cost of design, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Permitted Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, and any Indebtedness which refinances, replaces or refunds such Indebtedness, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred or issued to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 millionthe greater of, at any time outstanding, £15 million or 2.1% of the Company’s Total Assets;
(5) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses clause (2), (3), (4), (5), (8), (9), (13), (14) or (1519) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries Subsidiary of intercompany Indebtedness between or among the Company and or any of its Restricted SubsidiariesSubsidiary; provided, however, provided that:
(A) if the Company Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Company Issuer or a Guarantor, such Indebtedness must be unsecured and ((i) except in respect of the intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of the Company and its Restricted Subsidiaries and (ii) only to the extent legally permitted (the Company and its Restricted Subsidiaries having completed all procedures required in the reasonable judgment of directors of officers of the obligee or obligor to protect such Persons from any penalty or civil or criminal liability in connection with the subordination of such Indebtedness)) expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Senior Secured Notes, in the case of the Company, or the Note Senior Secured Notes Guarantee, in the case of a Guarantor, to the extent required by the Intercreditor Agreement; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Senior Secured Notes Indenture
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, PROVIDED that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, in each case if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.25 to 1, determined on a pro forma PRO FORMA basis (including a pro forma PRO FORMA application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the preferred stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”):
"): (1i) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xA) $20.0 290.0 million or (yB) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
Borrowing Base; (2ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
; (3iii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
; (4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4iv), not to exceed $15.0 million;
10.0 million at any time outstanding; (5v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2ii), (3iii), (4iv), (5), (8), (9), (13), (14v) or (15x) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Macdermid Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 750.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay permanently any term Indebtedness under a Credit Facility or to repay permanently any revolving credit Indebtedness under a Credit Facility and effect a corresponding permanent commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% the maximum principal amount of Consolidated Cash Flow for Indebtedness that could be incurred such that after giving effect to such incurrence, the most recently ended four full fiscal quarters for which financial statements are publicly availableSecured Leverage Ratio of the Company would be no greater than 3.00 to 1.00 (calculated assuming all Indebtedness incurred under this clause (1) is secured and without netting the cash proceeds of any such Indebtedness);
(2) the incurrence by the Company and any of its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds, economic development loans and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an ; provided that the aggregate principal amountamount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (43), shall not to exceed the greater of (x) $15.0 million50.0 million and (y) 3.0% of Consolidated Total Assets;
(54) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1517) of this Section 4.09(b);
(65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (65);
(76) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (76);
(8) 7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness and entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by the Board of Directors or senior management of the Company;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(109) the incurrence Indebtedness incurred by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, including without limitation, limitation letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries in respect of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company workers’ compensation claims or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingself-insurance, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company with respect to reimbursement type obligations regarding workers’ compensation claims or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical termsself-insurance; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of either upon the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion drawing of such item letters of credit or the incurrence of such Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion such obligations are reimbursed within 30 days following such drawing or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discountself-insurance;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (American Woodmark Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, ,
(1) directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired DebtIndebtedness), and the Company shall not ;
(2) issue any shares of Disqualified Stock and shall not permit any of its Restricted Subsidiaries to Stock; and
(3) issue any shares of preferred stock; provided, however, provided that the Company or any Restricted Subsidiary may incur Indebtedness (Indebtedness, including Acquired Debt) Indebtedness, or issue shares of Disqualified Stock, and the Guarantors any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such that additional Indebtedness is incurred or such that Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a consolidated pro forma basis (basis, including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such that four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit apply to the incurrence of any of the following items of Indebtedness Indebtedness, Disqualified Stock or preferred stock of Restricted Subsidiaries (collectively, “Permitted DebtIndebtedness”):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an Facilities; provided that the aggregate principal amount at any one time outstanding under this clause of all Indebtedness (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and those Restricted Subsidiaries thereunder) then classified as having been incurred in reliance upon this clause (1) that remains outstanding under such Credit Facilities after giving effect to that incurrence does not exceed an amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not equal to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available1,100.0 million;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the any Exchange Notes and the related Note Exchange Guarantees to be issued pursuant to in exchange therefor in accordance with the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease ObligationsObligations or other obligations, mortgage financings or purchase money obligationsDisqualified Stock or preferred stock, in each case, incurred the proceeds of which are used solely for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment (including acquisitions of Capital Stock of a Person that becomes a Restricted Subsidiary to the extent of the fair market value of the property, plant or equipment so acquired) used or useful in the business of the Company or any of its that Restricted SubsidiariesSubsidiary, in an aggregate principal amountamount (or accreted value, as applicable), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinancerefinance or replace such Indebtedness, replace, defease Disqualified Stock or discharge any Indebtedness incurred pursuant to this clause (4)preferred stock, not to exceed $15.0 million75.0 million outstanding after giving effect to that incurrence;
(5) Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing that acquisition; provided that:
(a) that Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on that balance sheet for purposes of this clause (a)); and
(b) in the case of a disposition, the maximum assumable liability in respect of that Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of those non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and/or that Restricted Subsidiary in connection with that disposition;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture is then classified as having been incurred pursuant to be incurred under Section 4.09(a) hereof or by clauses (2), (3), (4), (56), (8), 10) (9), (13), (1411) or (1514) of this Section 4.09(b);
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness Indebtedness, Disqualified Stock or preferred stock between or among the Company and and/or any of its Restricted Subsidiaries; provided, however, provided that:
(Aa) if the Company or any Guarantor is the obligor on such that Indebtedness, that Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, Notes or the applicable Note Guarantee, in the case of a Guarantor; and
(Bb) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Indebtedness, Disqualified Stock or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; thereof and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) incur any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, that the Company or any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stockIndebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), ) as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of So long as no Default shall have occurred and be continuing or would be caused thereby, Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $390.0 million, less the greater aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary of the Company to permanently repay any such Indebtedness (xand, in the case of any revolving credit Indebtedness, to effect a corresponding commitment reduction thereunder) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablepursuant to Section 4.10;
(2ii) the incurrence of Existing Indebtedness;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture;
(4iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4iv), not to exceed the greater of (a) $15.0 million40.0 million at any time outstanding and (b) 5% of the Consolidated Net Tangible Assets of the Company;
(5v) the incurrence by the Company or any Restricted Subsidiary of its Restricted Subsidiaries the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under this Section 4.09(a) hereof or clauses (2ii), (3iii), (4iv), (5v), (8), (9), (13), (14ix) or (15x) of this Section 4.09(b);
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among owing to and held by the Company and or any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor;
(b) Indebtedness owed to the Company or any Guarantor may not be subordinated in right of payment to any other indebtedness of the obligor of such Indebtedness, unless the obligor of such Indebtedness is the Company or a Guarantor; and
(Bc) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Companythereof, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence Guarantee by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10viii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in pursuant to the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes Supplemental Plan in an aggregate amount not to exceed $5.0 20 million outstanding at any time outstandingtime;
(15ix) the incurrence of Indebtedness by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingForeign Subsidiary, redeeming or otherwise acquiring or retiring for value the Subordinated Notes in an aggregate principal amount not to exceed $50 million outstanding on the date of this Indentureat any time; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; andor
(16x) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16x), not to exceed $35.0 100 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16x) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will shall be permitted to classify at the time of its incurrence such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interestIn addition, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in originally classified as incurred pursuant to Section 4.09(a) or pursuant to clauses 4.09(b)(i) through (x) above may later be reclassified by the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not Company such that it shall be deemed as having been incurred pursuant to Section 4.09(a) or pursuant to another of such clauses to the extent that such reclassified Indebtedness could be an incurrence incurred pursuant to Section 4.09(a) or such new clause at the time of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. such reclassification.
(c) Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur be incurred pursuant to this Section 4.09 shall not be deemed to be exceeded with respect to any outstanding Indebtedness due solely as a to the result of fluctuations in the exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personcurrencies.
Appears in 1 contract
Sources: Indenture (Moog Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 million 1,000.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the Issue Date to repay permanently any term Indebtedness under a Credit Facility or to repay permanently any revolving credit Indebtedness under a Credit Facility and effect a corresponding permanent commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness, including, prior to the redemption of the Existing Notes pursuant to an irrevocable notice of redemption delivered on or prior to the Issue Date or the consummation of the cash tender offer for any and all of the Company’s Existing Notes announced by the Company on November 30, 2020, the Existing Notes;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by by:
(a) Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted SubsidiariesSubsidiaries (other than Indebtedness incurred pursuant to clause (3)(b) below), in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (43)(a), not to exceed $15.0 million75.0 million at any time outstanding; and
(b) purchase money obligations and Indebtedness incurred to pay Open Account Obligations to finance the purchase of inventory held for sale or lease (including rental equipment) in the ordinary course of business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (3)(b), not to exceed $200.0 million at any time outstanding;
(54) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (914), (1317), (1418) or (1519) of this Section 4.09(b);
(65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (65);
(76) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (76);
(8) 7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(9) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance; provided, however, that either upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence or self-insurance;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, health and other types of social security benefits, unemployment and other self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, suretysurety and bid bonds, appeal cash management obligations and netting, overdraft protection and other similar bonds facilities or arrangements and completion guarantees in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements of the Company or such any of its Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price price, earn-outs or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any Restricted Subsidiary, business, assets property or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisitionasset;
(13) the incurrence by the Company or any Restricted Subsidiary Foreign Subsidiaries of Indebtedness constituting reimbursement obligations with respect in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to letters renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (13), not to exceed $20.0 million (or the equivalent thereof, measured at the time of credit issued each incurrence, in the ordinary course of business, including, without limitation, letters of credit to procure raw materialsapplicable foreign currency);
(14) the incurrence by Foreign the Company or any of its Restricted Subsidiaries of Indebtedness to the Company extent the net proceeds thereof are promptly deposited in trust to defease the Notes or to satisfy and discharge this Indenture, in each case in accordance with the terms of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingthis Indenture;
(15) the incurrence by Indebtedness of the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingGuarantor incurred to finance an acquisition, redeeming merger, consolidation or otherwise acquiring amalgamation, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or retiring for value the Subordinated Notes outstanding discharge any Indebtedness incurred pursuant to this clause (15); provided that on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrenceacquisition, would have been no greater than 4.5 to 1.0merger, determined on a consolidation or amalgamation after giving pro forma basis (including a pro forma application of the net proceeds therefrom), effect thereto as if such incurrence the same had occurred at the beginning of such the applicable four-quarter period; and, the Company would either (A) be permitted to incur at least $1.00 of additional Indebtedness pursuant to Section 4.09(a) hereof or (B) have a Fixed Charge Coverage Ratio of not less than the Fixed Charge Coverage Ratio of the Company immediately prior to such acquisition, merger, consolidation or amalgamation;
(16) the incurrence by the Company or any of its Restricted Subsidiaries owed on a short-term basis of not longer than 30 days to banks and other financial institutions incurred in the ordinary course of business with such banks or financial institutions in connection with ordinary banking arrangements to manage cash balances of the Company or the Restricted Subsidiaries;
(17) Indebtedness incurred by a Securitization Subsidiary in a Qualified Securitization Financing that is not recourse (except for Standard Securitization Undertakings) to the Company or any of its Restricted Subsidiaries or arising under any Receivables Facility;
(18) Indebtedness of the Company and the Guarantors related to the Notes and the related guarantees of the Notes, respectively (in each case, other than Additional Notes); and
(19) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness Indebtedness, Disqualified Stock or preferred stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1619), not to exceed the greater of $35.0 million75.0 million and 5.0% of Consolidated Net Tangible Assets at the time of incurrence thereof. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness Indebtedness, Disqualified Stock or preferred stock meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1619) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness Indebtedness, Disqualified Stock or preferred stock on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, Disqualified Stock or preferred stock in any manner that complies with this Section 4.09; provided that Indebtedness under Credit Facilities that is outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Subsidiary Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xi) $20.0 million 125.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to (a) repay any term Indebtedness under a Credit Facility or (yb) 50% repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder, in each of Consolidated Cash Flow for cases (a) and (b) pursuant to Section 4.10 hereof and (ii) the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million5.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1513) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessmade other than for speculative purposes;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu ranked equally with the Notes, then the Guarantee shall be subordinated or pari passurank equally, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and other similar surety bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price price, earn-outs or similar obligationobligations, in each case, case incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock a Subsidiary of a Subsidiarythe Company in accordance with the terms of this Indenture, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) ; provided that, with respect to any such disposition, the incurrence maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company or any and its Restricted Subsidiary of Indebtedness constituting reimbursement obligations Subsidiaries in connection with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter perioddisposition; and
(1613) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1613), not to exceed $35.0 15.0 million. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1613) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, principles and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) in addition to Debt incurred by the Company pursuant to clauses (2) through (14) below, the incurrence by the Company and any Guarantor its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater sum of (xA) $20.0 375.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 and (yB) 50% the amount of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableAcquired Borrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million5.0 million outstanding at any time;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1513) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly-Owned Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated 50 to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the applicable Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly-Owned Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s 's Restricted Subsidiaries to the Company or to any of its Wholly-Owned Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Wholly-Owned Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary normal course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the Notes, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of performance bonds, bankers' acceptances, workers’ ' compensation claims, surety or appeal bonds, payment obligations in connection with self-insurance or similar obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds bank overdrafts in the ordinary normal course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered repaid within five Business Days;
(12) Indebtedness of (A) the Company or a Restricted Subsidiary of the Company to the extent such Indebtedness was Indebtedness of a Person that was merged, consolidated or amalgamated into the Company or such Restricted Subsidiary of the Company or (b) a Restricted Subsidiary that was incurred and outstanding prior to the date on which such Restricted Subsidiary was acquired by the Company or a Restricted Subsidiary of the Company, in each case other than Indebtedness incurred in contemplation of, or in connection with, the transaction or series of related transactions pursuant to which such Person was merged, consolidated or otherwise acquired by the Company or a Restricted Subsidiary of the Company; provided, however, that for any such Indebtedness outstanding at any time under this clause (12), after giving pro forma effect thereto on the date of such acquisition, merger, consolidation or amalgamation, the Company or such Restricted Subsidiary would have been able to incur $1.00 of additional Indebtedness pursuant to Section 4.09(a) hereof;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such any Restricted Subsidiary providing for indemnification, adjustment of purchase price price, "earn out" or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any businessassets, assets or including shares of Capital Stock Stock, in accordance with the terms of a Subsidiarythis Indenture, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion provided, that the amount of such business, assets or a Subsidiary for Indebtedness does not exceed the purpose of financing such acquisition;
(13) the incurrence gross proceeds actually received by the Company or and its Restricted Subsidiaries in connection with any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter perioddisposition; and
(1614) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 50.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will shall be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person. Notwithstanding the foregoing, (i) all Indebtedness of the Company outstanding on the date of this Indenture shall be permitted and (ii) the Company shall be permitted to issue shares of Company common stock.
Appears in 1 contract
Sources: Indenture (Titan Distribution, Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company Trust shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company Trust shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, that the Company Trust may incur Indebtedness (including Acquired Debt) or and issue Disqualified Stock, and the Trust and the Guarantors may incur Indebtedness (including and issue Preferred Stock and any other Restricted Subsidiary may incur Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s Trust's most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock Preferred Stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis Pro Forma Basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Preferred Stock or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof will this covenant shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and any Guarantor Trust and/or one or more Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Trust and revolving credit facilities measured at entry of such facilitythe Restricted Subsidiaries, not at the date of drawdownwithout duplication, thereunder) not to exceed the greater of $625.0 million less (x) $20.0 million or the aggregate principal amount of Receivables Debt outstanding under clause (2) below and (y) 50% the aggregate amount of Consolidated Cash Flow for all Net Proceeds of Asset Sales applied by the most recently ended four full fiscal quarters for Trust or any of its Restricted Subsidiaries to repay any Indebtedness under a Credit Facility or Receivables Debt under Receivables Facilities and effect a corresponding commitment reduction thereunder pursuant to Section 4.11 hereof; provided, that Restricted Subsidiaries that are not Guarantors shall not directly or indirectly incur Indebtedness and letters of credit in an aggregate principal amount outstanding under this clause (1) in excess of $50.0 million; provided, further, that the aggregate principal amount of Indebtedness, letters of credit and Receivables Debt under Receivables Facilities which financial statements are publicly availablemay be incurred under this clause (1) and clause (2) below shall not be reduced below $100.0 million in the aggregate at any one time outstanding by reason of subclause (y) above and subclause (y) of clause (2) below;
(2) the incurrence by Receivables Subsidiaries of Receivables Debt under Receivables Facilities in an aggregate principal amount at any time outstanding pursuant to this clause (2) not to exceed $500 million less (x) the Company aggregate principal amount of Indebtedness and letters of credit (determined as described in clause (1) above) outstanding under clause (1) above and (y) the aggregate amount of all Net Proceeds of Asset Sales applied to reduce commitments with respect to Receivables Debt or Indebtedness under a Credit Facility pursuant to the covenant described in Section 4.11 hereof; provided, that the aggregate principal amount of Indebtedness, letters of credit and Receivable Debt under Receivables Facilities which may be incurred pursuant to this clause (2) and clause (1) above shall not be reduced below $100.0 million in the aggregate at any one time outstanding by reason of subclause (y) above and subclause (y) of clause (1) above;
(3) the incurrence by the Trust and its Restricted Subsidiaries of the Existing Indebtedness;
(34) the incurrence by the Company Trust and the Guarantors of Indebtedness represented by the Initial Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes Issue Date and the related Note Subsidiary Guarantees and the New Notes (as defined in the Registration Rights Agreement) to be issued pursuant to the Registration Rights AgreementAgreement and the related Subsidiary Guarantees;
(45) the incurrence by the Company Trust or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company Trust or any of its Restricted Subsidiariessuch Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (45), not to exceed $15.0 million50.0 million at any time outstanding;
(5a) the incurrence by the Company Trust or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof the first paragraph of this covenant or clauses (2), (3), (4), (5), (8), (96), (13), or (14) or (15) of this Section 4.09(b);
paragraph and (6b) the incurrence by the Company Trust or any of its Restricted Subsidiaries of Permitted Preferred Stock in exchange for, or the net proceeds of which are used to refund, refinance or replace Preferred Stock (other than intercompany Preferred Stock) that was permitted by this Indenture to be incurred under the first paragraph of this covenant;
(7) the incurrence by the Trust or any of its Restricted Subsidiaries of intercompany Indebtedness or Preferred Stock between or among the Company Trust and any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company Trust or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the CompanyTrust, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness or Preferred Stock being held by a Person other than the Company Trust or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness or Preferred Stock to a Person that is not either the Company Trust or a Restricted Subsidiary of the Company, will thereof; shall be deemed, in each case, to constitute an incurrence of such Indebtedness or Preferred Stock by the Company Trust or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company Trust or any of its Restricted Subsidiaries of Hedging Obligations that are incurred solely for the purpose of (a) fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or (b) hedging currency or commodity risks of the Trust and its Restricted Subsidiaries incurred by the Trust or such Restricted Subsidiaries in the ordinary course of their business;
(9) the guarantee by the Company Trust or any of the Guarantors of Indebtedness of the Company Trust or a Restricted Subsidiary of the Company Guarantor that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedcovenant;
(10) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence by of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the Company amount thereof is included in Fixed Charges of the Trust as accrued;
(11) Indebtedness of the Trust or any Restricted Subsidiary represented by performance bonds and letters of its credit for the account of the Trust or such Restricted Subsidiaries of Indebtedness Subsidiary, as the case may be, in respect of order to provide security for workers’ ' compensation claims, claims and payment obligations in connection with self-insurance obligationsinsurance, bankers’ acceptancesin each case, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds that are incurred in the ordinary course of business;
(11) business in accordance with customary industry practice in amounts, and for the incurrence by purposes, customary in the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business DaysTrust's industry;
(12) Indebtedness of the incurrence by the Company Trust or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received or to be received by the Trust and the Restricted Subsidiary in connection with such dispositions;
(13) Indebtedness of the incurrence by the Company Trust or any Restricted Subsidiary solely in respect of Indebtedness constituting reimbursement obligations with respect bankers acceptances, and appeal bonds (to letters the extent that any such incurrence does not result in the incurrence of credit issued any obligation to repay any obligation relating to borrowed money of others), all in the ordinary course of businessbusiness in accordance with customary industry practices, includingin amounts and for the purposes customary in the Trust's industry; provided that the aggregate principal amount outstanding of such Indebtedness (including any Indebtedness issued to refinance, without limitation, letters of credit to procure raw materialsrefund or replace such Indebtedness) shall at no time exceed $5.0 million;
(14) the incurrence by Foreign Subsidiaries of the Company any Restricted Subsidiary that is not a Guarantor of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstandingaccordance with Section 4.10 hereof;
(15) the incurrence guarantee by the Company or any Restricted Subsidiary that is not a Guarantor of Second Lien Debt for the sole purpose Indebtedness of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of a Restricted Subsidiary that is not a Guarantor that was permitted to be incurred under this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company Trust or any of its Restricted Subsidiaries the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this covenant, the Company will Trust shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, incurrence in any manner that complies with this Section 4.09covenant. The accrual of interest, Indebtedness under Credit Facilities outstanding on the accretion or amortization of original issue discount, the payment of interest date on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, which Notes are first issued and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not authenticated under this Indenture shall be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, have been incurred on such date in reliance on the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
exception provided by clause (1) the accreted value of the Indebtedness, in the case definition of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonPermitted Debt.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of the following items of Disqualified Stock or preferred stock, as applicable (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $420.0 million less the greater aggregate amount of (x) $20.0 million all Net Proceeds of Asset Sales applied by the Company or (y) 50% any of Consolidated Cash Flow for its Restricted Subsidiaries since the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of (a) the Existing IndebtednessIndebtedness and (b) the Subordinated Intercompany Promissory Note;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of $15.0 million5.0 million and 1.5% of Total Assets at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (22)(a), (3), (4), (5), (8), (914), (1315), (1416) or (1517) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessnot entered into for speculation;
(9) the guarantee or co-issuance by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company to the extent that the guaranteed or co-issued Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed or co-issued is subordinated to or pari passu in right of payment with the Notes, then the Guarantee shall or co-issuance must be subordinated or pari passu, as applicable, in right of payment to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of letters of credit, bank guarantees, workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit)guarantees, performance, surety, appeal and other statutory, appeal, completion, export or import, indemnities, customs, revenue bonds or similar bonds instruments in the ordinary course of business, including guarantees or obligations with respect thereto (in each case other than for an obligation for money borrowed); provided, however that upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business DaysDays or incurrence;
(12) the incurrence by the Company of Contribution Indebtedness;
(13) the incurrence by the Company or any of its Restricted Subsidiary Subsidiaries of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each caseobligations, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock Restricted Subsidiary of a Subsidiary, the Company (other than guarantees Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Restricted Subsidiary for the purpose of financing such acquisition;
(13) ), so long as the incurrence principal amount of such Indebtedness does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations the Company in connection with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materialssuch transactions;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence incurred by the Company or any of its Restricted Subsidiaries to finance the purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company, including Parent and ▇▇▇▇▇▇▇ Companies, to the extent described in Section 4.07(b)(5) hereof;
(15) Indebtedness of a Subsidiary outstanding on the date such Subsidiary was acquired by the Company or a Restricted Subsidiary of the Company (other than Indebtedness incurred in contemplation of, or in connection with, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary of or was otherwise acquired by the Company or a Restricted Subsidiary of the Company); provided that, on the date that such Subsidiary is acquired by the Company or a Restricted Subsidiary of the Company and after giving effect to the incurrence of such Indebtedness and the acquisition of such Subsidiary pursuant to this clause (15), either (a) the Company would have been able to incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant or (b) the Company’s Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition;
(16) the incurrence by one or more Foreign Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16)) and then outstanding, not to exceed the greater of $35.0 million20.0 million and 3% of Total Assets; and
(17) the incurrence by the Company of additional Indebtedness or Disqualified stock, or by one or more Restricted Subsidiaries of additional Indebtedness or preferred stock, in an aggregate principal amount (or accreted value or liquidation amount, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (17) and then outstanding, not to exceed the greater of $20.0 million and 3% of Total Assets. The Company shall will not incur, and shall will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first junior priority basis or pursuant to any customary provisions of any inter-creditor agreements related to the lien subordination (but not the payment subordination) of any such junior Lien basissecurity interest. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1617) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify and reclassify, in each case in its sole discretion, such item of Indebtedness and may divide, classify and reclassify (based on circumstances in existence at the time of such reclassification or redivision) such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of its incurrence, or later reclassify all or a portion the definition of such item of Indebtedness, in any manner that complies with this Section 4.09Permitted Debt. The accrual of interestinterest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, principles and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Hillman Companies Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall Issuer will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall Issuer will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, that the Company Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stockPreferred Stock, if the Leverage Debt to Cash Flow Ratio for the CompanyIssuer’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock Preferred Stock is issued, as the case may be, would have been no greater than 7.0 6.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock Preferred Stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, nor will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Companyit prohibit Issuer’s Restricted Subsidiaries to from issuing the Company or to any following types of its Restricted Subsidiaries of shares of preferred stock; provided, however, thatPreferred Stock:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall Issuer will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall Issuer will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stockPreferred Stock; provided, however, that the Company Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stockPreferred Stock, if the Leverage Debt to Cash Flow Ratio for the Company’s Issuer's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock Preferred Stock is issued, as the case may be, would have been no greater than 7.0 6.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock Preferred Stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions first paragraph of Section 4.09(a) hereof this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility), not at the date of drawdown) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its nor will it prohibit Issuer's Restricted Subsidiaries from issuing the following types of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, thatPreferred Stock:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Business Combination Agreement (Metropcs Communications Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 million 450.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availableBorrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by by:
(a) Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted SubsidiariesSubsidiaries (other than Indebtedness incurred pursuant to clause (4)(b) below), in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (44)(a), not to exceed $15.0 million35.0 million at any time outstanding; and
(b) purchase money obligations and Indebtedness incurred to pay Open Account Obligations to finance the purchase of inventory held for sale or lease (including rental equipment) in the ordinary course of business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4)(b), not to exceed $175.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (914), (13), (1416) or (1517) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “''incur”'') any Indebtedness (including Acquired Debt), ) and that the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, provided that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock if, in each case, the Company's Debt to Adjusted Consolidated Cash Flow Ratio at the time of incurrence of the Indebtedness or the issuance of the preferred stock, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds from such incurrence or issuance as if the Leverage Ratio for same had occurred at the Company’s beginning of the most recently ended four full fiscal quarters quarter period of the Company for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may beavailable, would have been no greater than 7.0 7.5 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness or to the issuance of any of the following items of Disqualified Stock or preferred stock (collectively, “''Permitted Debt”''):
(1) the incurrence by the Company and or any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured its Restricted Subsidiaries thereunder) at entry of such facility, not at the date of drawdown) any one time outstanding not to exceed the greater product of (x) $20.0 million or (y) 50% 150,000 times the number of Consolidated Cash Flow for Completed Towers on the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and of the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be Senior Notes, each issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementhereof;
(4) the issuance by the Company of additional shares of its 12 3/4% Senior Exchangeable Preferred Stock due 2010 solely for the purpose of paying dividends thereon and the incurrence by the Company of Indebtedness represented by the Company's 12 3/4% Senior Subordinated Exchange Debentures due 2010;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (45), not to exceed $15.0 million10.0 million at any one time outstanding;
(56) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refundextend, refinance, renew, replace, defease or discharge refund Indebtedness of the Company or any Indebtedness of its Restricted Subsidiaries or Disqualified Stock of the Company (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof 4.09 or clauses (2), (3), (4), (5), (8), (9), (13), (14) or this clause (156) of this Section 4.09(b)paragraph;
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case Notes of the Company, or the Note Guarantee, in the case of a Guarantor; andsuch series and that:
(Bii) (1A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall Parent will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall Parent will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company Parent may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Issuers and the Guarantors (other than Parent) may incur Indebtedness (including Acquired Debt) or issue preferred stock, if if:
(1) the Leverage Fixed Charge Coverage Ratio for the CompanyParent’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least (a) at any time prior to 1the completion of the Initial Public Offering, 2.25 to 1.0, and (b) at any time on or after completion of the Initial Public offering, 2.0 to 1.0, in each case determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; and
(2) in the case of any such Indebtedness that is Pari Passu Indebtedness, the sum of the aggregate principal amount of Pari Passu Indebtedness incurred pursuant to this paragraph since the Issue Date that is outstanding on the date of such incurrence plus the aggregate principal amount of notes outstanding on the date of such incurrence (in each case, after giving pro forma effect to the incurrence of such Pari Passu Indebtedness and application of the net proceeds therefrom) does not exceed (a) at any time prior to the completion of the Initial Public Offering, $350.0 million, or (b) at any time on or after completion of the Initial Public Offering, $500.0 million.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company Parent and any Guarantor of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of Parent and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (xa) $20.0 75.0 million or (yb) 50% the Borrowing Base as of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of incurrence;
(2) the incurrence by the Company Parent and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company Issuers and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of under this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company Parent or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price price, taxes or cost of design, construction, installation or improvement or lease of property, plant or equipment (including software) used in the business of the Company Parent or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (a) $15.0 million25.0 million or (b) 5% of Total Assets as of any date of incurrence;
(5) the incurrence by the Company Parent or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1516) of this Section 4.09(b);
(6) the incurrence by the Company Parent or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company Parent and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company either Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Company an Issuer or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Companyan Issuer, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company Parent or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company Parent or a Restricted Subsidiary of the CompanyParent, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company Parent or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the CompanyParent’s Restricted Subsidiaries to the Company Parent or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company Parent or a Restricted Subsidiary of the CompanyParent; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company Parent or a Restricted Subsidiary of the CompanyParent, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company Parent or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company Issuers or any of the Guarantors of Indebtedness of the Company Parent or a Restricted Subsidiary of Parent to the Company extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company Parent or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance, self-insurance obligations, obligations and bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds acceptances in the ordinary course of business;
(11) the incurrence by the Company Parent or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence of Indebtedness by Parent or any of its Restricted Subsidiaries in the Company form of performance bonds, completion guarantees and surety or appeal bonds and similar obligations entered into by Parent or any of its Restricted Subsidiaries in the ordinary course of their business;
(13) Indebtedness of Parent or any Restricted Subsidiary issued to any of its directors, employees, officers or consultants or to a Restricted Subsidiary in connection with the redemption or purchase of Capital Stock that, by its terms or by operation of law, is subordinated to the Notes, is not secured by any of the assets of Parent or the Restricted Subsidiaries and does not require cash payments prior to the Stated Maturity of the Notes, in an aggregate principal amount which, when added with the amount of Indebtedness incurred under this clause (13) and then outstanding, does not exceed $5.0 million at any one time outstanding;
(14) the incurrence of Indebtedness by Parent or any of the Restricted Subsidiaries arising from agreements of Parent or any of the Company or such Restricted Subsidiary Subsidiaries providing for indemnification, adjustment of purchase price or other similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock a Restricted Subsidiary of a Subsidiary, other than guarantees of Parent;
(15) Indebtedness incurred by any Person acquiring all Parent or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness Subsidiaries constituting reimbursement obligations with respect to under letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of materials or relating to workers’ compensation claims or self-insurance, or other Indebtedness in the ordinary course of business for working capital purposes in an amount not relating to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such fourreimbursement-quarter periodtype obligations regarding workers’ compensation claims; and
(16) the incurrence by the Company Issuers or any of its Restricted Subsidiaries the Guarantors of additional Indebtedness or Disqualified Stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 25.0 million. The Company shall not incurParent will not, and shall will not permit any Guarantor to incurto, incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company Issuers or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company Issuers or any Guarantor solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien priority basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company MagnaChip will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interestinterest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of Parent as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company Parent or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, Stock and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor Restricted Subsidiary of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed the greater of (x) $20.0 900.0 million less the aggregate amount of all (i) Secured Indebtedness incurred in reliance on Section 4.12(a)(1) and (ii) Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay permanently any term Indebtedness under a Credit Facility or to repay permanently any revolving credit Indebtedness under a Credit Facility and effect a corresponding permanent commitment reduction thereunder pursuant to Section 4.10 hereof and (y) 50% the maximum principal amount of Consolidated Cash Flow for Indebtedness that could be incurred such that after giving effect to such incurrence, the most recently ended four full fiscal quarters for which financial statements are publicly availableSecured Leverage Ratio of the Company would be no greater than 2.75 to 1.00 (calculated assuming all Indebtedness incurred under this clause (1) is secured and without netting the cash proceeds of any such Indebtedness);
(2) the incurrence by the Company and any of its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or financings, industrial revenue bonds, economic development loans and purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an ; provided that the aggregate principal amountamount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (43), shall not to exceed the greater of (x) $15.0 million50.0 million and (y) 4.0% of Consolidated Total Assets;
(54) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1517) of this Section 4.09(b);
(65) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (65);
(76) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (76);
(8) 7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness and entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by the Board of Directors or senior management of the Company;
(9) 8) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(109) the incurrence Indebtedness incurred by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, including without limitation, limitation letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries in respect of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company workers’ compensation claims or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasingself-insurance, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company with respect to reimbursement type obligations regarding workers’ compensation claims or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical termsself-insurance; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of either upon the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion drawing of such item letters of credit or the incurrence of such Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion such obligations are reimbursed within 30 days following such drawing or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discountself-insurance;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Patrick Industries Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Except as otherwise provided in this Section 4.09, the Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), ) and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company or any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) Stock or issue preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), therefrom as determined in good faith by the chief financial officer of the Company in an Officer’s Certificate) as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The Except as otherwise provided in Section 4.09(c), the provisions of Section 4.09(a) hereof will not prohibit apply to the incurrence of any of the following items of Indebtedness or the issuance of any of the following items of Disqualified Stock or preferred stock (collectively, “Permitted Debt”):
(1i) the incurrence by the Company and/or its Restricted Subsidiaries (and any the Guarantee thereof by the Guarantors and the Non-Guarantor Subsidiaries) of Indebtedness and letters of credit under the Credit Facilities in an Facilities; provided that the aggregate principal amount at any one time outstanding under this clause of all Indebtedness (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and its Restricted Subsidiaries thereunder) outstanding under all Credit Facilities after giving effect to such incurrence, including all Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (i), does not exceed (A) an amount thereunder whether or not drawn equal to $250.0 million prior to the Initial Call Termination Date and revolving credit facilities measured at entry of such facility, not at the date of drawdownthereafter (B) not to exceed the greater of (x) $20.0 250.0 million or and (y) 5085% of Consolidated Cash Flow for the total tangible assets of the Company and its Restricted Subsidiaries on a consolidated basis as of the end of the most recently ended four full completed fiscal quarters for which financial statements are publicly availablequarter prior to such incurrence, as determined in accordance with GAAP, in each case, less the aggregate principal amount of all principal payments thereunder constituting permanent reductions of such Indebtedness pursuant to and in accordance with Section 4.10;
(2ii) the incurrence by the Company and its those Restricted Subsidiaries that are Guarantors of Indebtedness in respect of the Existing IndebtednessNotes, replacement Notes, if any, and the Note Guarantees;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;
(4iii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by (including Capital Lease Obligations, mortgage financings financings, Attributable Debt arising out of sale and leaseback transactions or purchase money obligations), Disqualified Stock or preferred stock, in each case, case (x) incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, lease, installation or improvement or lease improvements of property, plant or equipment used or useful in the business of the Company or any such Restricted Subsidiary, or (y) otherwise constituting Attributable Debt arising out of its Restricted Subsidiariessale and leaseback transactions, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), amount not to exceed (A) $15.0 million20.0 million at any time outstanding prior to the Initial Call Termination Date and (B) thereafter $30.0 million at any time outstanding;
(5iv) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness;
(v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness or Replacement Preferred Stock in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) or any Disqualified Stock or preferred stock that was permitted by this Indenture to exist or be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b)incurred;
(6vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A1) if the Company or any Restricted Subsidiary that is a Guarantor is the obligor on such Indebtedness and the payee is not the Company or a such Guarantor, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeGuarantees, in the case of a such Guarantor; and
, and (B2) (1x) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2y) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was which new incurrence is not permitted by this clause (6vi);
(7vii) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
that (A1) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
Company and (B2) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, Company will be deemed, in each case, to constitute an a new issuance of such preferred stock by such Restricted Subsidiary that was Subsidiary, which new issuance is not permitted by this clause (7vii);
(8) viii) the incurrence by the Company or any of its the Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9ix) the guarantee guarantee: (1) by the Company or any Restricted Subsidiary of the Guarantors Company of Indebtedness of the Company or a any Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedguaranteed and (2) by any Non-Guarantor Subsidiary of Indebtedness of a Non-Guarantor Subsidiary;
(10x) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, suretysurety bonds, appeal and bonds or other similar bonds and completion guarantees provided by the Company or a Restricted Subsidiary in the ordinary course of business;
(11xi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient fundsfunds in the ordinary course of business; provided, so long as however, that such Indebtedness is covered extinguished within five Business DaysDays of incurrence;
(12xii) the incurrence by of Indebtedness arising from Guarantees of Indebtedness of the Company or any Restricted Subsidiary of Indebtedness arising from or the agreements of the Company or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price price, holdback, contingency payment obligations or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all the Company or any portion Restricted Subsidiary; provided that the maximum aggregate liability in respect of all such business, assets or a Subsidiary for Indebtedness shall at no time exceed the purpose of financing gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such acquisitiondisposition;
(13xiii) the incurrence of Indebtedness resulting from endorsements of negotiable instruments for collection in the ordinary course of business;
(xiv) Indebtedness (which may include Disqualified Stock or preferred stock) of Persons that are acquired by the Company or any Restricted Subsidiary (including by way of merger or consolidation) in accordance with the terms of this Indenture; provided that such Indebtedness, Disqualified Stock or preferred stock is not incurred in contemplation of such acquisition or merger; and provided, further, that after giving effect to such acquisition or merger, either (A) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio or (B) the Company’s Fixed Charge Coverage Ratio after giving pro forma effect to such acquisition or merger would be greater than the Company’s actual Fixed Charge Coverage Ratio immediately prior to such acquisition or merger;
(xv) Indebtedness of the Company or a Restricted Subsidiary in respect of netting services, overdraft protection and otherwise in connection with deposit accounts; provided that such Indebtedness remains outstanding for ten Business Days or less;
(xvi) the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction;
(xvii) the incurrence by the Company of Additional Notes pursuant to Section 2.18;
(xviii) the incurrence by the Company of Indebtedness consisting of Subordinated Shareholder Funding; and
(xix) the incurrence or issuance by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of businessadditional Indebtedness, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company Disqualified Stock or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness preferred stock in an aggregate principal amount (or accreted valuevalue or liquidation preference, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness and all Replacement Preferred Stock incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness such Indebtedness, Disqualified Stock and preferred stock incurred or issued pursuant to this clause (16xix), not to exceed (A) $35.0 15.0 million prior to the Initial Call Termination Date and (B) thereafter $40.0 million. The .
(c) Notwithstanding the provisions of Section 4.09(a) and Section 4.09(b), prior to the date which is eighteen (18) months following the Closing Date, neither the Company shall not incur, and shall not permit nor any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness Restricted Subsidiary of the Company or shall incur any Senior Debt if, at the time of the incurrence of such Guarantor unless such Senior Debt, the Company’s Consolidated Total Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical termsConsolidated Cash Flow Ratio (after giving a pro forma effect thereto) would have been greater than 3.75 to 1.00; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to this Section 4.09(c) shall not apply to:
(i) the incurrence by the Company or any other Indebtedness Restricted Subsidiary of the Company solely of Senior Debt otherwise permitted to be incurred under the Congress Credit Facility; and
(ii) the incurrence by virtue the Company or any Restricted Subsidiary of being unsecured the Company of Indebtedness otherwise permitted to be incurred under clause (viii), (ix), (x), (xi), (xii), (xiii), (xv) or by virtue (xvi) of being secured on Section 4.09(b).
(d) Notwithstanding the provisions of Section 4.09(a), prior to the Initial Call Termination Date, neither the Company nor any Restricted Subsidiary of the Company shall incur any Indebtedness permitted to be incurred pursuant to Section 4.09(a) if, at the time of the incurrence of such Indebtedness, the Company’s Consolidated Total Indebtedness to Consolidated Cash Flow Ratio (after giving a first or junior Lien basis. pro forma effect thereto) would have been greater than 3.75 to 1.00.
(e) For purposes of determining compliance with this Section 4.09covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xix) above or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted to may, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness permitted by this Section 4.094.09 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such clause and in part by one or more other provisions of this Section 4.09 permitting such Indebtedness. The outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any Guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09; provided that, in each such case, the maximum amount thereof is included in Fixed Charges of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant as accrued (other than the reclassification of preferred stock as Indebtedness due to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations change in exchange rates or currency values. accounting principles).
(f) The amount of any Indebtedness outstanding as of on any date will be:
be (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
and (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
of (Ax) the Fair Market Value of such assets at the date of determination; and
determination and (By) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Senior Subordinated Loan Agreement (J Crew Group Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and that the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, provided that the Company may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, Stock and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock if, in each case, the Company's Debt to Adjusted Consolidated Cash Flow Ratio at the time of incurrence of the Indebtedness or the issuance of the preferred stock, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds from such incurrence or issuance as if the Leverage Ratio for same had occurred at the Company’s beginning of the most recently ended four full fiscal quarters quarter period of the Company for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may beavailable, would have been no greater than 7.0 7.5 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) . The provisions of the first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness or to the issuance of any of the following items of Disqualified Stock or preferred stock (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and or any Guarantor of its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured its Restricted Subsidiaries thereunder) at entry of such facility, not at the date of drawdown) any one time outstanding not to exceed the greater product of (x) $20.0 million or (y) 50% 150,000 times the number of Consolidated Cash Flow for Completed Towers on the most recently ended four full fiscal quarters for which financial statements are publicly availabledate of such incurrence;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and of the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be Senior Notes, each issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreementhereof;
(4) the issuance by the Company of additional shares of its 12 3/4% Senior Exchangeable Preferred Stock due 2010 solely for the purpose of paying dividends thereon and the incurrence by the Company of Indebtedness represented by the Company's 12 3/4% Senior Subordinated Exchange Debentures due 2010;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, case incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any other Indebtedness incurred pursuant to this clause (45), not to exceed $15.0 million10.0 million at any one time outstanding;
(56) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refundextend, refinance, renew, replace, defease or discharge refund Indebtedness of the Company or any Indebtedness of its Restricted Subsidiaries or Disqualified Stock of the Company (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof 4.09 or clauses (2), (3), (4), (5), (8), (9), (13), (14) or this clause (156) of this Section 4.09(b)paragraph;
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(Ai) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case Notes of the Company, or the Note Guarantee, in the case of a Guarantor; andsuch series and that:
(Bii) (1A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”"):
(1) the incurrence by the Company and or any Guarantor of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facilityits Restricted Subsidiaries thereunder), not at to exceed $2,078.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company, any of its Restricted Subsidiaries or by any Affiliate Guarantor since the date of drawdownthis Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to clause (1) not to exceed the greater of (xSection 4.10(a) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablehereof;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors Restricted Subsidiaries of Indebtedness represented by the Initial Notes and the related Note Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights AgreementIndenture;
(4) the incurrence by the Company of the Guarantee of the Convertible Debentures;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amountamount (or accreted value, as applicable), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (45), not to exceed $15.0 million100.0 million at any time outstanding;
(56) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses clause (2), (3), (4), (5), (8), (96), (1315)(a), (1416) or (1519) of this Section 4.09(b);
(67) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesSubsidiaries or between the Company or any of its Restricted Subsidiaries on the one hand and Dynegy on the other hand; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1x) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or Company, a Restricted Subsidiary of the Company or Dynegy and (2y) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or Company, a Restricted Subsidiary of the CompanyCompany or Dynegy, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (67);
(7) 8) the issuance by any of the Company’s 's Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will ; shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7)8);
(8) 9) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessObligations;
(910) the guarantee Guarantee by the Company or any of the Guarantors its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(1011) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ ' compensation claims, self-insurance obligations, bankers’ ' acceptances, completion guarantees (including related letters of credit), performance, surety, appeal performance and other similar surety bonds in the ordinary course of business;
(1112) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(1213) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such a Restricted Subsidiary Subsidiary, providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock Equity Interests of a Subsidiary, other than guarantees ; provided that the maximum aggregate liability in respect of all such Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for shall at no time exceed the purpose of financing such acquisition;
gross proceeds (13including non-cash proceeds) the incurrence actually received by the Company or any and/or such Restricted Subsidiary of Indebtedness constituting reimbursement obligations in connection with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materialssuch disposition;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in connection with the deferred purchase price of goods or services, or progress payments in connection with such goods and services, including turbines, transformers and similar equipment, so long as such obligations are incurred in the ordinary course of business;
(15) the incurrence of Indebtedness by the Company or any of its Restricted Subsidiaries in connection with (a) Discontinued Business Operations (other than in respect of tolling agreements, Litigation and the wind-down, settlement or disposition of the customer risk management business) of the Company and its Restricted Subsidiaries in an aggregate principal amount (or accreted value, as applicable) at any time outstanding), including all Permitted Refinancing Indebtedness incurred to renewrefund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (15), not to exceed $30.0 million at any time outstanding (provided that any Indebtedness created or incurred as a result of set off, cancellation, assignment or similar transaction among or between Restricted Subsidiaries that engage in Discontinued Business Operations, or among or between such Restricted Subsidiaries and other Guarantors in connection with the wind-down of the Discontinued Business Operations, shall not be included when calculating the foregoing dollar limitation) and (b) Litigation;
(16) the incurrence of Indebtedness by Dynegy Midwest Generation, Inc. or any other Restricted Subsidiary of the Company in satisfaction of the obligations of Illinois Power pursuant to the ▇▇▇▇▇▇ Lease, including the incurrence of any obligation to pay "Rent" or the "Purchase Amount" (each as defined in the ▇▇▇▇▇▇ Lease) in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed at any time outstanding $35.0 million. The Company shall not incur, and shall not permit 81.0 million less any Guarantor amounts invested pursuant to incur, any Indebtedness clause (including Permitted Debt17) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right definition of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of "Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discountInvestments";
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Dynegy Inc /Il/)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), ) and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or and issue shares of Disqualified Stock, and the Guarantors Company's Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or and, subject to Section 4.18 hereof, issue preferred stock, stock if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four six full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such preferred stock or Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such foursix-quarter period.
. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest rate on such Indebtedness shall be calculated as if the weighted average interest rate that would have been applicable to such Indebtedness determined over the latest 12-month period ending on the last calendar month immediately prior to the date of determination had been the applicable rate on such Indebtedness for the entire period (btaking into account any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Company or any of its Restricted Subsidiaries against fluctuations in interest rates (including any agreement that exchanges a fixed rate interest obligation for a floating rate interest obligation) applicable to such Indebtedness if such agreement or arrangement has a remaining term in excess of 12 months). The provisions first paragraph of this Section 4.09(a) hereof will 4.09 shall not prohibit apply to the incurrence of any of the following items of Indebtedness Indebtedness, Disqualified Stock or preferred stock, as applicable (collectively, “"Permitted Debt”"):
(1i) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with i) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed (A) the greater of (x1) $20.0 million or 400.0 million; and (y2) the sum of 85% of the book value of accounts receivable and 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablebook value of Inventory of the Company and its Restricted Subsidiaries, calculated on a consolidated basis in accordance with GAAP; less, (B) all indebtedness outstanding under the Credit Agreement incurred pursuant to clause (ii) below;
(2ii) the incurrence by the Company and the Guarantors of Indebtedness and letters of credit under the Credit Agreement;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3iv) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and (including, for clarification purposes, the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement);
(4v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment used in the business of the Company or any of its such Restricted SubsidiariesSubsidiary, in an aggregate principal amountamount at any time outstanding pursuant to this clause (v), including all Permitted Refinancing Indebtedness incurred and Permitted Redeemable Stock issued to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4v), not to exceed $15.0 50.0 million;
(5vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09(a) hereof or clauses (2iii), (3iv), (4v), (5vi), (8), (9x), (13xi) or (xii) of this paragraph;
(vii) the issuance by the Company of Permitted Redeemable Stock, the net proceeds of which are used to refund, refinance or replace
(A) Indebtedness that was permitted to be incurred under the first paragraph of this Section or clauses (iii), (14iv), (v), (vi), (x), (xi) or (15xii) of this paragraph, (B) Disqualified Stock that was permitted to be issued under the first paragraph of this Section 4.09(b)or (C) Permitted Redeemable Stock that was permitted to be issued under this clause (vii) of this paragraph;
(6viii) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
that (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a GuarantorIndebtedness, such Indebtedness must be is expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a the Guarantor; and
and (B) )
(1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6viii);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9ix) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteedSection;
(10x) industrial revenue bonds of the Company or any of its Restricted Subsidiaries incurred to finance the construction or improvement of their respective operations in an aggregate principal amount at anytime outstanding pursuant to this clause (x), including all Permitted Refinancing Indebtedness incurred and Permitted Redeemable Stock issued to refund, refinance or replace Indebtedness incurred pursuant to this clause (x), not to exceed $ 100.0 million;
(xi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness issuable upon the conversion or exchange of shares of Disqualified Stock, pursuant to the terms of such Disqualified Stock issued in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection accordance with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date first paragraph of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter periodSection; and
(16xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred and Permitted Redeemable Stock issued to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (16xii), not to exceed $35.0 50.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09:
(A) the outstanding principal amount of any particular Indebtedness shall be counted only once and any obligation arising under any guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall be disregarded;
(B) in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1i) through (16xii) above or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this Section, the Company will be permitted to shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The Section;
(C) Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Debt; and
(D) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09Section; provided, the maximum amount of Indebtedness in each such case, that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations amount thereof is included in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value Fixed Charges of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other PersonCompany as accrued.
Appears in 1 contract
Sources: Indenture (Potlatch Corp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries that is not a Guarantor to issue any shares of preferred stock; provided, however, that the Company and any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.0 to 11.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), ) as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period; provided further, that the amount of Indebtedness (including Acquired Debt), Disqualified Stock or preferred stock that may be incurred or issued, as applicable, by Restricted Subsidiaries that are not Guarantors, pursuant to this Section 4.09(a), shall not exceed $250.0 million at any one time outstanding.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor its Restricted Subsidiaries of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal an amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $2.80 billion, less the greater sum of (xi) the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries to repay Indebtedness under Credit Facilities pursuant to Section 4.10 and (ii) the amount of Indebtedness in excess of $20.0 500.0 million or incurred pursuant to clause (y10) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablebelow;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and (excluding any Additional Notes), the related Note Subsidiary Guarantees to be issued on of all Notes, the date of this Indenture and the Exchange 2026 Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreementof all 2026 Notes;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation construction or improvement or lease of property, plant or equipment assets used in the business of the Company or any such Restricted Subsidiary, or in respect of its Restricted Subsidiariesa Sale and Leaseback Transaction, in an aggregate principal amount, including and all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (4), not to exceed $15.0 million150.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, refinance or replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses clause (2), (3), (4), (5), (8), (9), (13), (14) or (153) of above or this clause (5) or pursuant to Section 4.09(b4.09(a);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among owed to the Company and or any of its Restricted Subsidiaries; provided, however, that:
(Aa) if the Company or any Guarantor is the obligor on such Indebtedness, and such Indebtedness and the payee is held by a Restricted Subsidiary that is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note GuaranteeSubsidiary Guarantee of such Guarantor, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company thereof and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any Indebtedness under Hedging Obligations entered into for bona fide hedging purposes of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Company; and
(B) any sale or other transfer of any Indebtedness to which such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7)Hedging Obligations relate;
(8) the incurrence guarantee by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant and could have been incurred (in compliance with this covenant) by the Person so guaranteeing such Indebtedness;
(9) the incurrence by any of the Company’s Foreign Subsidiaries of Indebtedness in an aggregate principal amount, including all Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (9), not to exceed (x) $125.0 million at any time outstanding plus (y) $100.0 million at any time outstanding; provided that if the any Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee under this subclause (y) shall be subordinated supported by a letter of credit incurred under one or pari passu, as applicable, more Credit Facilities pursuant to the same extent as the Indebtedness guaranteedclause (1) of this Section 4.09(b);
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of businesspursuant to a Receivables Financing;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient fundsfunds in the ordinary course of business; provided, so long as however, that such Indebtedness is covered extinguished within five Business DaysDays of incurrence;
(12) the incurrence by Indebtedness of the Company or any of its Restricted Subsidiary Subsidiaries in respect of Indebtedness arising from agreements security for workers’ compensation claims, payment obligations in connection with self-insurance, performance bonds, surety bonds or similar requirements in the ordinary course of the Company or such Restricted Subsidiary providing for business;
(13) indemnification, adjustment of purchase price price, earn-out or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, business or assets of the Company or Capital Stock any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary Equity Interests for the purpose of financing or in contemplation of any such acquisition;
; provided that (13a) any amount of such obligations included on the incurrence by face of the balance sheet of the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued shall not be permitted under this clause (13) and (b) in the ordinary course case of businessa disposition, including, without limitation, letters the maximum aggregate liability in respect of credit to procure raw materials;
all such obligations outstanding under this clause (1413) shall at no time exceed the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence gross proceeds actually received by the Company or any and the Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of Subsidiaries in connection with such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter perioddisposition; and
(1614) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (1614), not to exceed $35.0 275.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness .
(including Permitted Debtc) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1614) above above, or is entitled to be incurred pursuant to Section 4.09(a) hereofthe first paragraph of this covenant, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, incurrence (or later reclassify all such Indebtedness in whole or a portion of such item of Indebtedness, in part) in any manner that complies with this Section 4.09covenant. The In addition, the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be treated as an incurrence of Indebtedness; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding the foregoing, any Indebtedness or an issuance of Disqualified Stock for purposes outstanding pursuant to the Credit Agreement on the date of this Section 4.09. Indenture will be deemed to have been incurred pursuant to clause (1) of the definition of “Permitted Debt.”
(d) Notwithstanding any other provision of this Section 4.09the foregoing, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur be incurred pursuant to this Section 4.09 covenant shall not be deemed to be exceeded with respect to any outstanding Indebtedness due solely as a to the result of fluctuations in the exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Indebtedness of the other Personcurrencies.
Appears in 1 contract
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Debt), Indebtedness) and the Company shall will not issue any shares of Disqualified Stock and shall will not permit any of its Restricted Subsidiaries Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that on or after the first anniversary following the Issue Date, the Company may incur Indebtedness (including Acquired DebtIndebtedness) or issue shares of Disqualified Stock, and the Guarantors any Guarantor (other than ▇▇▇▇▇ Indiana) may incur Indebtedness (including Acquired Debt) or Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if (i) no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect to such incurrence of Indebtedness or issuance of shares of Disqualified Stock or preferred stock, and (ii) the Total Leverage Ratio for the Company’s and the Restricted Subsidiaries’ most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater less than 7.0 or equal to 6.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred incurred, or the Disqualified Stock or the preferred stock had been issued, as the case may be, and the application of proceeds therefrom, had occurred at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof foregoing limitations will not prohibit apply to the incurrence of any following (each of the following items of Indebtedness (collectivelyfollowing, “Permitted DebtIndebtedness”):
(1) (A) the incurrence of Indebtedness under Credit Facilities by the Company or any of the Company’s Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), not to exceed $350 million outstanding at any one time, minus all principal payments made in respect of any term loans or the amount by which any commitments thereunder are permanently reduced, in each case, from the proceeds of one or more Asset Sales pursuant to Section 4.12 and (B) up to $150 million of term loan borrowings solely for the purpose of financing the construction of the tower and related capital improvements at the ▇▇▇▇▇ ▇▇▇ Mahal Casino Resort.
(2) the incurrence by the Company and any Guarantor of Indebtedness in aggregate principal amount not to exceed $1.25 billion represented by the Notes (including any Guarantee thereof) represented by this Indenture;
(3) Existing Indebtedness (other than Indebtedness described in the immediately preceding clauses (1) and letters (2) and clause (4) below);
(4) Indebtedness (including Capitalized Lease Obligations) and Disqualified Stock incurred by the Company or Indebtedness (including Capitalized Lease Obligations) incurred by any of credit under Credit Facilities the Restricted Subsidiaries, to finance the purchase, lease, construction or improvement of property (real or personal) or equipment that is used or useful in a Permitted Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, in an aggregate principal amount at any one time which, when aggregated with the principal amount of all other Indebtedness and Disqualified Stock then outstanding under and incurred pursuant to this clause (1)(with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown4) not to exceed the greater of (x) $20.0 million or (y) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of including any Refinancing Indebtedness represented by the Notes and the related Note Guarantees permitted to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued incurred pursuant to the Registration Rights Agreement;
clause (412) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness and incurred to renewextend, refund, refinance, replacedefease, defease renew or discharge any replace Indebtedness or Disqualified Stock incurred pursuant to this clause (4) or subsequent Refinancing Indebtedness attributable to Indebtedness or Disqualified Stock incurred pursuant to this clause (4), ) does not to exceed at any time in the aggregate outstanding $15.0 million20.0 million per Casino Property;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (15) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment extent such incurrence does not result in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of any obligation for the payment of borrowed money of others, Indebtedness by the Company or any of its Restricted Subsidiaries owed to any Person in connection with workers’ compensation, self-insurance, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such person, in each case incurred in the ordinary course of business;
(6) Indebtedness arising from agreements of the Company or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;; provided, however, that:
(13i) such Indebtedness is not reflected on the incurrence by balance sheet of the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement (contingent obligations with respect referred to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit a footnote to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount financial statements and not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding reflected on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock balance sheet will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock reflected on such balance sheet for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
clause (16)(i)) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3ii) the maximum assumable liability in respect of all such Indebtedness of another Person secured by a Lien on shall at no time exceed the assets of the specified Person, the lesser of:
gross proceeds including noncash proceeds (A) the Fair Market Value of such assets noncash proceeds being measured at the date time received and without giving effect to any subsequent changes in value) actually received by the Company and the Restricted Subsidiaries in connection with such disposition;
(7) Indebtedness (including Indebtedness related to Sale and Lease-Back Transactions) of determinationthe Company to a Restricted Subsidiary or of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that:
(i) if the Company or any Guarantor is the borrower of such Indebtedness and the lender is a Restricted Subsidiary that is not a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Note Obligations, in the case of the Company, or the Guarantee, in the case of a Guarantor; and
(Bii) any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the amount Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (7);
(8) shares of Disqualified Stock or preferred stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Disqualified Stock or preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of Disqualified Stock or preferred stock;
(9) (i) any guarantee by the Company or a Guarantor of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of the Indebtedness of the other Person.Indenture, or
Appears in 1 contract
Sources: Indenture (Trump Entertainment Resorts Holdings Lp)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “"incur”") any Indebtedness (including Acquired Debt), and the Company shall not issue any shares of Disqualified Stock and the Company shall not permit any of its Restricted Subsidiaries to issue any shares of Disqualified Stock or preferred stock; provided, however, that that, so long as no Default or Event of Default has occurred and is continuing, the Company may shall be permitted to incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, and the Guarantors any Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stockIndebtedness, if the Leverage Fixed Charge Coverage Ratio for the Company’s 's most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such the additional Indebtedness is incurred or such the Disqualified Stock or such preferred stock is issued, as the case may be, issued would have been no greater than 7.0 at least 2.25 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, issued at the beginning of such that four-quarter period.
(b) The provisions of Section 4.09(aclause (a) hereof will above shall not prohibit apply to the incurrence of any of the following items of Indebtedness (collectively, “"Permitted Debt”Indebtedness"):
(1) the incurrence by the Company and any Guarantor the Guarantors of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with with letters of credit being deemed to have a principal amount equal to the maximum face potential liability of the Company and the Guarantors thereunder) under the First Lien Credit Facility in an aggregate principal amount thereunder whether or not drawn and revolving credit facilities measured at entry of such facility, not at the date of drawdown) not to exceed the greater of of: (xa) $20.0 million 90.0 million; or (yb) 50the sum of 60% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly available;
(2) the incurrence by inventory of the Company and its Restricted Subsidiaries Subsidiaries, plus 85% of accounts receivable of the Existing IndebtednessCompany and its Restricted Subsidiaries, in each case determined in accordance with GAAP as of the most recent balance sheet, less the aggregate amount of all Net Proceeds of Asset Sales applied to permanently repay any of the Indebtedness referred to in this Section 6.10(b)(1) pursuant to Section 6.11;
(32) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note any Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to Section 13;
(3) any Existing Indebtedness of the Registration Rights AgreementCompany and its Restricted Subsidiaries and any guarantees of the Existing Indebtedness;
(4) the incurrence of Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries; provided, however, that (a) if the Company is the obligor on that Indebtedness, the Indebtedness is expressly subordinated to the prior payment in full of all Obligations with respect to the Notes and (b) any subsequent issuance or transfer of Capital Stock that results in any of this Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary, and any sale or other transfer of that Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary, shall be deemed, in each case, to constitute an incurrence of that Indebtedness by the Company or the Restricted Subsidiary, as the case may be;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of (a) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Section 6.10 to be outstanding, (b) foreign exchange contracts or (c) currency swap agreements or other similar agreements or arrangements; provided, however, that the notional amount of any currency swap agreement does not exceed the principal amount of debt to which such currency swap agreement relates;
(6) the guarantee by the Company or any of the Guarantors of Indebtedness that was permitted to be incurred by another provision of this Section 6.10;
(7) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness, including, without limitation, Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount (or accreted amount, as applicable) at any time outstanding under this clause (7), including all Permitted Refinancing Indebtedness incurred pursuant to renew, clause (8) below to refund, refinance, replace, defease refinance or discharge replace any Indebtedness incurred pursuant to this clause (47), not to exceed $15.0 10.0 million;
(5) 8) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease refinance or discharge any replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under by clause (a) of this Section 4.09(a) hereof 6.10, or by clauses (2), (3), (4), (5), (8), (96), (13), 7) and (14) or (1511) of this Section 4.09(bclause (b);
(69) the incurrence by the Company or any of its Restricted Company's Unrestricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted SubsidiariesNon-Recourse Debt; provided, however, that:
(A) that if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and
(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, the event shall be deemed to constitute an incurrence of Indebtedness by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (69);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, completion guarantees (including related letters of credit), performance, surety, appeal and other similar bonds in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by the Company or any Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligation, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09Stock; provided, however, that in each such case, the maximum amount thereof is included in Fixed Charges of Indebtedness that the Company as accrued;
(11) the incurrence by the Company or any Restricted Subsidiary may incur of the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted amount, as applicable) at any time outstanding under this clause, including all Permitted Refinancing Indebtedness incurred pursuant to clause (8) above to refund, refinance or replace any Indebtedness incurred pursuant to this Section 4.09 shall clause (11), not be deemed to be exceeded exceed $15.0 million, solely as for the purpose of financing acquisitions of Permitted Businesses; provided, however, that the Fixed Charge Coverage Ratio on a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(pro forma basis after giving effect to such acquisitions is at least 2.25 to 1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(312) Indebtedness incurred by the Company and/or any Guarantor and held by Trivest (subject to participations) (i) the proceeds of which are used by the Company to make scheduled payments of interest on the Senior Subordinated Notes, and (ii) contains terms no less favorable to the Company and any Guarantor than those that would have been obtained by the Company and any Guarantor in respect a comparable transaction with an unrelated Person; provided that (a) such Indebtedness shall provide that the payment of interest thereon shall be made only in-kind (and not in cash or other property) for so long as any Notes remain outstanding, (b) such Indebtedness shall be subordinated in right of another Person payment to the Notes pursuant to the terms of an intercreditor agreement in form and substance reasonably satisfactory to the Required Noteholders, (c) shall have affirmative and negative covenants no more onerous or restrictive to the Company and any Guarantor than those set forth in the Senior Subordinated Notes Indenture as in effect on the date of this Agreement and (d) may be secured by a Lien on the assets Collateral, provided that such Lien shall be junior in priority and subject to the Lien on the Collateral securing the Notes pursuant to the terms of an intercreditor agreement in form and substance reasonably satisfactory to the Required Noteholders ("Senior Subordinated Notes Make-Well Indebtedness").
(c) For purposes of determining compliance with this Section 6.10, in the event that an item of Indebtedness meets the criteria of more than one of the specified Personcategories of Permitted Indebtedness described in clause (b) above or is entitled to be incurred pursuant to the clause (a) above, the lesser of:Company shall, in its sole discretion, classify or reclassify that item of Indebtedness in any manner that complies with this covenant and the item of Indebtedness shall be treated as having been incurred pursuant to only one of those clauses or pursuant to clause (a) above.
(Ad) The Company will not, and will not permit any Guarantor to, directly or indirectly, incur any Indebtedness that purports to be by its terms (or by the Fair Market Value terms of any agreement governing such assets at the date of determination; and
(BIndebtedness) the amount of the subordinated to any other Indebtedness of the Company or of such Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinate to the Notes or any Guarantee of such Guarantor to the same extent and in the same manner as such Indebtedness is subordinated to such other PersonIndebtedness of the Company or such Guarantor, as the case may be.
Appears in 1 contract
Sources: Purchase and Security Agreement (Brown Jordan International Inc)
Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall will not, and shall will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incurIncur”) any Indebtedness (including Acquired Debt), and the Company shall will not issue any Disqualified Stock and shall will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors Restricted Subsidiaries of the Company may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are publicly available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than 7.0 at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):
(1) the incurrence by the Company and any Guarantor of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1)(with 1) (with letters of credit being deemed to have a principal amount equal to the maximum face amount thereunder whether or not drawn potential liability of the Company and revolving credit facilities measured at entry of such facility, not at the date of drawdownits Restricted Subsidiaries thereunder) not to exceed $650.0 million less (i) the greater aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof and (xii) $20.0 million or the amount of any Indebtedness of a Receivables Subsidiary outstanding under clause (y12) 50% of Consolidated Cash Flow for the most recently ended four full fiscal quarters for which financial statements are publicly availablebelow;
(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Subsidiary Guarantees to be issued on the date of this Indenture and the Exchange Notes and the related Note Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, synthetic leases or the Attributable Debt with respect to sale and leaseback transactions, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refundextend, refinance, renew, replace, defease or discharge refund any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of $15.0 million25.0 million and 3.5% of Consolidated Tangible Assets at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refundextend, refinance, renew, replace, defease or discharge any refund Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5), (8), (9), (13), (14) or (1513) of this Section 4.09(b);
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Subsidiary Guarantee, in the case of a Guarantor; and
(B) (1i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company Company, and (2ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(Aa) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(Bb) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of businessbusiness for bona fide hedging purposes and not for the purpose of speculation;
(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee guarantee shall be subordinated or pari passu, as applicable, passu to the same extent as the Indebtedness guaranteed;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance and surety bonds, completion guarantees (including related letters of credit), performance, surety, appeal and other or similar bonds arrangements in the ordinary course of business;
(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(12) the incurrence by any Receivables Subsidiary of Indebtedness pursuant to a Qualified Receivables Transaction;
(13) Indebtedness of a Subsidiary incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness incurred in contemplation of, or any Restricted in connection with, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary of or was otherwise acquired by the Company); provided, however, that Indebtedness outstanding at any time under this clause (13) shall not exceed $20.0 million;
(14) Indebtedness arising from agreements of the Company or such a Restricted Subsidiary providing for indemnification, adjustment of purchase price price, earn-out or similar obligationobligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, businesses or assets or Capital Stock of a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations otherwise permitted in accordance with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit to procure raw materials;
(14) the incurrence by Foreign Subsidiaries of the Company of Indebtedness in the ordinary course of business for working capital purposes in an amount not to exceed $5.0 million at any time outstanding;this Indenture; and
(15) the incurrence by the Company or any Restricted Subsidiary of Second Lien Debt for the sole purpose of repurchasing, redeeming or otherwise acquiring or retiring for value the Subordinated Notes outstanding on the date of this Indenture; provided that the First Lien Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which financial statements are publicly available immediately preceding the date of such incurrence, would have been no greater than 4.5 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such incurrence had occurred at the beginning of such four-quarter period; and
(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (16), not to exceed $35.0 million. The Company shall not incur, and shall not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (1615) above or is entitled to be incurred pursuant to Section 4.09(a) hereof), the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, and will only be required to include the amount and type of such Indebtedness in one of the above clauses or Section 4.09(a), although the Company may divide and classify an item of Indebtedness in more than one of the types of Indebtedness, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.094.09 except that Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture and Indebtedness under the Credit Facility incurred on the date of the consummation of the ▇▇▇▇▇▇ Industries Acquisition will be deemed to have been incurred on such dates in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of another Person person secured by a Lien on the assets of the specified Personperson, the lesser of:
(A) the Fair Market Value of such assets an asset at the date of determination; and
, and (B) the amount of the Indebtedness of the other Person.
Appears in 1 contract
Sources: Indenture (Gardner Denver Inc)